Accounting Theory & Contemporary Issues

Running head: ACCOUNTING THEORY & CONTEMPORARY ISSUES
Accounting Theory & Contemporary Issues
Name of the Student
Name of the University
Author’s Note

ACCOUNTING THEORY & CONTEMPORARY ISSUES1
Table of Contents
Answer to Question 1.................................................................................................................2
Answer to Question 2.................................................................................................................2
Answer to Question 3.................................................................................................................3
Answer to Question 4.................................................................................................................4
References..................................................................................................................................5

ACCOUNTING THEORY & CONTEMPORARY ISSUES2
Answer to Question 1
Conceptual Framework – Conceptual Framework in accounting refers to a system that has
interrelation with the financial reporting objectives, accounting information’s characteristics,
financial statements’ elements, principles and transactions. It plays a crucial role in assisting
the International Accounting Standards Board (IASB) to develop International Financial
Reporting Standards (IFRS) while helping the corporations to set their accounting policies
and rules (ifrs.org 2019).
Benefits – Conceptual framework to set accounting standards while issuing accounting
concepts and objectives which are rules-based. At the same time, it provides the companies
with both comparability as well as consistency in financial reports. In the presence of
conceptual framework, efficiency of financial reporting increases while companies become
beneficial from effective communication. It helps in increasing confidence as well as
understanding of the users in financial reports (ifrs.org 2019).
Problems and Critiques – Since conceptual framework is not a standard, a firm can get
affected at the time to develop as well as select accounting policies in the presence of any
standard. It has been criticised because there can be occurrence of conflict between the
conceptual framework and previous accounting standards. Certain opportunities of
conceptual framework might not work in all jurisdictions which is a major flaw (ifrs.org
2019).
Answer to Question 2
According to the conceptual framework, the main objective of the general purpose
financial reporting should be to provide the investors and other users of the financial
statements with the financial information on the financial performance and position of the
entities so that they can make effective investment decisions (ifrs.org 2019). In 2010, two