Financial Accounting Standards Board $($FASB$)$

The Financial Accounting Standards Board $($FASB$)$ has developed a conceptual framework for financial accounting and reporting. FASB has issued eight Statements of Financial Accounting Concepts $($SFAC$)$ as of August, $2013.$ These statements establish objectives and fundamentals that will be the basis for developing financial accounting and reporting standards.

The purpose of SFAC No$.6,$ "Elements of Financial Statements$$a replacement of FASB Concepts Statement No$.3($incorporating an amendment of FASB Concepts Statement No$.2)"$ was to examine the characteristics that make accounting information useful. The characteristics or qualities of information discussed in SFAC No$.6$ are the ingredients that make information useful and are the qualities to be sought when accounting choices are made.

SFAC # $6$ is one of a series of publications in the FASB conceptual framework for financial accounting and reporting. Statements in the series are intended to establish objectives and fundamentals that will be the basis for development of financial accounting and reporting standards. The objectives identify the goals and purposes of financial reporting. The fundamentals are the underlying concepts of financial accounting $$ concepts that guide the selection of transactions, events, and circumstances to be accounted for; their recognition and measurement; and the means of summarizing and communicating them to interested parties. Concepts of that type are fundamental in the sense that other concepts flow from them and repeated reference to them will be necessary in establishing, interpreting, and applying accounting and reporting standards.

Concepts Statement No$.8-$ Conceptual Framework for Financial Reporting $$Chapter $1$: "The Objective of General Purpose Financial Reporting," and Chapter $3,$ "Qualitative Characteristics of Useful Financial Information $($a replacement of FASB Concepts Statements No$.1$ and No$.2)."$ This Concepts Statement, which includes two chapters of that new conceptual framework, supersedes FASB Concepts Statements No$.1,$ Objectives of Financial Reporting by Business Enterprises, and No$.2,$ Qualitative Characteristics of Accounting Information. As the Board and the IASB complete additional phases of their joint project, new chapters will be added to this Concepts Statement, and other Concepts Statements will be superseded.

After you have completed the required reading, respond to the following questions in your initial response:

What is the most important quality for accounting information as identified in the Statement of Financial Accounting Concepts No$.6?$ Explain why it is the most important.

What is the most important quality for accounting information as identified in the Statement of Financial Accounting Concepts No$.8?$ Explain why it is the most important.

Additional possible topics to include in your discussion:

Identify and discuss the benefits that can be expected to be derived from the FASB's conceptual framework study.

SFAC No$.6$ and No$.8$ describe a number of key characteristics or qualities for accounting information. Briefly discuss the importance of understandability, relevance, and reliability for financial reporting purposes.