The International Accounting Standards Board (IASB) is currently working with other accounting standards setting bodies in the world to have a global application of International Financial Reporting Standards. An important point of focus is conceptual framework.
Required: Explain the importance of a conceptual framework and the key issues that such a framework should address.
- Objectives of financial statements(currently they are three relating to financial performance, financial position and changes in cash position.
- Qualities of useful financial information such as understandability, reliability, relevance and comparability.
- The elements of financial statements ie assets, liabilities, capital, incomes and expenses.
- Measurement of the elements using different values such as historical cost, exit value, present value and replacement value.
- Purpose and status of framework such as providing guidance on standard setting and does not override the requirements of a standard.
- Recognition of elements in the financial statements ie whether changes in future economic resources will be affected.
- Concept of profit and capital maintenance like financial and physical maintenance.
I am an MBA student. Doing course work