logo

ACC307 Accounting Theory : Assignment

   

Added on  2020-05-11

12 Pages2592 Words140 Views
ACC307 Individual Assignment1

ContentsIntroduction.................................................................................................................................................3Conceptual Accounting Framework Analysis.............................................................................................3Conclusion...................................................................................................................................................9References.................................................................................................................................................112

IntroductionThe main purpose of the essay is to provide an insight into the changes brought in theaccounting filed with the introduction of conceptual accounting framework. In this context, theessay discusses the benefits obtained by the adoption of conceptual accounting framework to thebusiness entities for financial reporting. The conceptual framework of accounting can cause largescale changes in the activities of the business entities and can also exert control over the publicsector organizations from staves off to control accounting standard settings. The accountingframework is developed primarily to protect the interest of primary users such as investors andcreditors by providing them reliable financial information. However, the introduction of newaccounting standards such as AASB 1020 with the development of conceptual framework forfinancial reporting is not widely accepted by business entities across the country. The statementof accounting concepts no. 4 (SAC 4) has provided the definition and recognition of financialstatements elements. However, the adoption of SAC 4 would require businesses to report greateramount of liabilities and thus its adopted with the conceptual framework of accounting is not yetaccepted by businesses (Horngren, 2012). In this context, this essay is directed to theChairpersons of the Financial Reporting Council and the Australian Accounting Standards Board(AASB) for illustrating whether the attempts to bring changes by conceptual framework adoptionin financial accounting have proved to be successful or not. Conceptual Accounting Framework AnalysisThe conceptual accounting framework is developed by the IASB (InternationalAccounting Standards Board) in order to improve the quality of financial reporting. Theaccounting framework is intended to protect the interest of primary users of financial reports that3

enhancing transparency in business operations. The accounting professionals integrate the use ofarguments cited by the accounting theories for financial reporting. The two main theories used inthis context are positive and normative theory of accounting. The positive theory of accountinghas argued that accounting managers tend to select the accounting procedures that maximizes thefirm value by providing increasing retunes to shareholders (Godfrey and Jayne, 2010). On theother hand, the normative theory of accounting seeks to define the objective of accounting that isto define the optimal accounting approaches to be used for financial reporting (Hussey and Ong,2017). It provides assistance to the accounting professionals regarding the best accountingmethod to be selected as per the given conditions that should help in meeting the interests ofusers as well as of the firm. The conceptual accounting framework is developed on the basis of normative theory ofaccounting that helps in identifying the financial reporting objective. The qualitativecharacteristics of conceptual accounting framework are developed on the basis of the normativetheory accounting principles and guidance. The qualitative characteristics are relevancy,reliability, comparability and understandability that help in ensuring that financial reportseffectively meet the requirements of end-users. The international accounting standards boardaims at bringing various changes in the financial reporting such as information disclosed inregarding to economic resources and claims of a business entity. It has legitimized the currentaccounting practice through implementing standard accounting policies and procedure forfinancial reporting (Kabalski, 2009). SAC 4 is the guideline statements issued to establish set of rules to present theinformation in the financial statements. The SAC 4 provides the definitions of the variouselements of the financial statements and also provides the recognition criteria of each of them4

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Theory and Progression in the Field
|8
|1879
|56

Current Development In Accounting Thought | ACC518
|9
|2342
|140

(Doc) Accounting Theory - Assignment
|10
|3230
|34

11 Current Development in Accounting Thoughts Introduction
|11
|3397
|54

Contemporary Issues in Accounting
|15
|2118
|46

Accounting Theory and Contemporary Issues | Report
|7
|1220
|37