...THEORETICAL STRUCTURE OF FINANCIAL ACCOUNTING Overview The primary function of financial accounting is to provide useful financial information to users external to the business enterprise. The focus of financial accounting is on the information needs of investors and creditors. These users make critical resource allocation decisions that affect the nation’s economy. The primary means of conveying financial information to investors, creditors, and other external users is through financial statements and related notes. In this chapter you explore important topics such as the FASB’s conceptual framework that serve as a foundation for a more detailed study of financial statements, the way the elements of these statements are measured, and the concepts underlying these measurements and related disclosures. Learning Objectives LO1–1 Describe the function and primary focus of financial accounting. LO1–2 Explain the difference between cash and accrual accounting. LO1–3 Define generally accepted accounting principles (GAAP) and discuss the historical development of accounting standards, including convergence between U.S. and international standards. LO1–4 Explain why the establishment of accounting standards is characterized as a political process. LO1–5 Explain factors that encourage high-quality financial reporting. LO1–6 Explain the purpose of the conceptual framework. LO1–7 Identify the objective and qualitative characteristics of financial reporting information...
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...9 -7 1 4 -4 3 2 JANUARY 29, 2014 JUAN ALCÁCER JOHN CLAYTON Emirates Airline: Connecting the Unconnected Introduction Late afternoon was fading to dusk as Tim Clark, President of Emirates Airline, gazed out at the large crowds mingling outside at the 2013 Dubai Airshow. Front and center at the event was the official program launch of the Boeing 777X, a massive new hit thanks to Emirates’ record order of 150 new planes. Valued at $76 billion at list prices, this was the largest airplane deal ever inked. Letting his thoughts drift, he noted, he imagined with pride these planes joining the collection of widebodied Emirates planes assembled on the tarmac of Dubai International Airport, ready to ferry passengers from Europe, Asia, Africa, the Americas and the Gulf to their respective destinations. This is the face of the global economy, he thought to himself, as he marveled at his company’s success. Emirates was indeed a global success story. In just twenty-five years the airline had grown to become the third-largest airline globally by capacity and the largest by number of international passengers.1 (See Exhibit 1). Twenty-three new routes were added in 2012 and 2013,2 and capacity growth was expected to increase by 18.4% in 2013 thanks to deliveries of new aircraft, including the new A380s deployed to over 20 destinations.3 Emirates anticipated that its meteoric growth would continue and was building its fleet accordingly: with 41 A380s integrated into its fleet thus far...
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