Role of Conceptual Framework in Accounting and General Purpose Financial Reporting Objectives

Running Head: ACCOUNTING THEORY
ACCOUNTING THEORY
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1ACCOUNTING THEORY
Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Question 1..............................................................................................................................2
Question 2..............................................................................................................................3
Question 3..............................................................................................................................3
Question 4..............................................................................................................................4
Conclusion..................................................................................................................................4
Reference....................................................................................................................................6

2ACCOUNTING THEORY
Introduction
The concept of conceptual framework helps in representing system of ideas and the
objectives, which helps in creating consistent set of rules and regulations. Accounting rules as
well as standards set out the nature, limits and the functions of the financial accounting and
the financial statements (Ifrs.org. 2019). Hence, under this assignment, discussion will be
done on the role of conceptual framework in accounting, objectives of general-purpose
financial accounting, concept of prudence, substance over form as well as faithful
representations.
Discussion
Question 1
Conceptual Framework Role in Accounting
The conceptual framework helps in playing important role in the accounting. The
conceptual framework has the key role in assisting IASB in the IFRS future development and
reviewing current IFRS. It assists the preparers of the financial statements in development of
policies of accounting for the transactions or the events, which are not covered in existing
standards. Further, the major benefits for having conceptual framework is for setting the
standards of the accounting, a basis for the resolutions of the disputes of the accounting as
well as fundamental principles, which don’t have to be repeated in standards of the
accounting (Ifrs.org. 2019).
The conceptual framework of the year 2010 was heavily criticized regarding the lack
of clarity, for being outdated in relation to current thinking of the IASB as well as exclusion
of the some of the important concepts. As the result of which, IASB has proposed for shifting
the fundamentals concepts of the assets as well as liabilities for improving the clarity
(Ifrs.org. 2019).