a) explain the main purposes of the IASB’s Conceptual Framework document. (b) discuss the assumption that (according to the IASB’s Conceptual Framework) underlies the preparation of financial statements.
The International Accounting Standards Board (IASB) devises and publishes International Financial Reporting Standards (IFRS Standards) while it revised versions of International Accounting Standards (IAS Standards) originally published by the International Accounting Standards Committee (IASC). The IASB has also published the Conceptual Framework for Financial Reporting reflecting some of the attributes that make financial information useful to the various users of financial statements.
You are required to:
(a) explain the main purposes of the IASB’s Conceptual Framework
document.
(b) discuss the assumption that (according to the IASB’s Conceptual
Framework) underlies the preparation of financial statements.
The International accounting standards committee (IASC) was replaced by international accounting standards board (IASB) in the year 2001 which now issues International Financial Accounting standards (IFRS).
The main purpose of conceptual framework (IASB) was to assist and review the future international financial accounting standards and also review the already existing ones.
The conceptual framework gives direction and structures the financial accounting as per the international standards. If there were no conceptual framework accounting standards would be chaotic and inconsistent with each other so by having a framework the users and makers of financial statements that accounting standards are based on this common concept and ideology, and they have to be consistent with that. By having a conceptual framework, it improves the credibility of accounting for the end users who need this information in decision making.
This conceptual framework also would help in preparing new accounting policies which were not covered in the existing standards.
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