Accounting Theory and Contemporary Issues Answer 2022

Running head: ACCOUNTING THEORY AND CONTEMPORARY ISSUES
Accounting Theory and Contemporary Issues
Name of the Student
Name of the University
Author Note

Accounting Theory and Contemporary Issues
1
Table of Contents
Answer: 1...................................................................................................................................2
Conceptual Framework in Accounting..................................................................................2
Benefits..................................................................................................................................2
Limitations.............................................................................................................................2
Answer: 2...................................................................................................................................3
Objective of general purpose financial reporting...................................................................3
Answer: 3...................................................................................................................................3
Prudence.................................................................................................................................3
Answer: 4...................................................................................................................................4
Concept of substance over form and justification..................................................................4
References..................................................................................................................................4

Accounting Theory and Contemporary Issues
2
Answer 1
Conceptual Framework in Accounting
The conceptual framework in accounting reflects a system that is interrelated to
objectives of financial reporting, characteristics of accounting information, elements of
financial statement, transactions and principles. The conceptual framework in accounting
helps the board by guiding in developing International Financial Reporting Standard (IFRS)
standards, the Companies in setting their policies of accounting and the stakeholders in
understanding. Some issue in the accounting standards has revised by the International
Accounting Standard Board (IASB) in 2010 with the US Financial Accounting Standard
Board (FASB) (Ifrs.org 2019).
Benefits
 It helps in setting accounting standards and issuing rules based on concepts and
objectives
 It provides an aspect of comparability and consistency of financial statements
 It benefits the company in financial reporting through increasing efficiency and better
communication and helps in resolving the issues
 It builds up confidence and understanding to the users in company’s financial report
(Sheppes et al. 2014).
Limitations
 Entities can get affected in developing and selecting the policies when no standard has
applied to a transaction as conceptual framework is not a standard
 Conflict can arise due to difference in preceding accounting standard and current
conceptual framework