Bundle: Intermediate Accounting 16e Binder Ready Version + WileyPLUS Access Code
Bundle: Intermediate Accounting 16e Binder Ready Version + WileyPLUS Access Code
16th Edition
ISBN: 9781119231554
Author: Donald E. Kieso
Publisher: Wiley (WileyPLUS Products)
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Chapter 2, Problem 1Q
To determine

Conceptual framework: The theoretical structure which is created to support the real time situation in a standardized manner is termed conceptual framework. In other terms, conceptual framework is a logical presentation of interrelated objectives and the fundamentals that can lead to a standard procedure. The conceptual framework for financial accounting provides the nature, limitation, and functions of the financial accounting.

To determine what is conceptual framework and why is it necessary.

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Explanation of Solution

Reasons for conceptual framework in financial accounting:

  • (a) The conceptual framework helps IFRS to provide more useful standards for accounting the transactions.
  • (b) The theory base provides a path to take a quick decision during discrepancies.
  • (c) The understanding of the financial reports and statements becomes easy for the users.
  • (d) The standard creates a way to compare the statements of a competitor and also provides scope for future planning.
Conclusion

Thus, conceptual framework creates a common format or procedure in recording the transactions in the balance sheet.

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