Accounting Theory and Contemporary Issues

Running head: ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Accounting theory and contemporary issues
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1ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Table of Contents
Answer to question 1..................................................................................................................2
Answer to question 2..................................................................................................................3
Answer to question 3..................................................................................................................3
Answer to question 4..................................................................................................................4
Answer (a)..............................................................................................................................4
Answer (b)..............................................................................................................................4
Reference....................................................................................................................................6

2ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Answer to question 1
Purpose of conceptual Framework is presenting the concepts for fundamental
accounting, financial reporting, methods for measuring accounting information, concepts
associated with the financial statements, recognition of the financial activities and
representing them under proper accounting system. It plays major role while issuing and
setting accounting standards and rules thereon that shall be followed by established body of
concepts and objectives. Further, it allow the users to generate useful information associated
with the accounting 2 May take credit related and investment related decisions (Aasb.gov.au
2018)
Advantages associated with conceptual framework while reporting the financial
statements are as follows –
 It provides the basis for the rationale and objectives of financial reporting
 Conceptual framework provides the standards compared with which different core
and dedicated accounting practices are demonstrated in the objective manner
It helps in developing various decisions in consistent manner. Generally, these
decisions are concerned with different approaches for supporting accounting standards and
appropriate accounting practices (Aasb.gov.au 2018).
Criticisms associated with the present conceptual framework are as follows –
 Financial statements are prepared for different kinds of users and one particular
framework may not be suitable for all the users.
 As it provides wide amount of guidance for the standards setters, it may create rigidity
through increasing the difficulty while introducing any new idea (Bauer, O'Brien and
Saeed 2014).