Importance of a conceptual framework.
A conceptual framework may be considered as an attempt to assemble a body of accounting theory (or interrelated concepts) as a guide to standard setting so the standards are (as far as possible) formulated on a consistent basis and not in an ad hock manner. On another level, a conceptual framework may be thought of as a device confers legitimacy and authority on a private sector standard settler that lacks the legal authority of a public body. The IASB, as a private sector standard setter, shares these reasons for developing a conceptual framework
Key issues to be addressed by the framework
1. Objectives- of financial statements (currently they are three relating to financial performance, financial position and changes in cash position).
2. Quantities of useful financial information such as understand ability, reliability, relevance and comparability.
3. The elements of financial statements i.e. assets, liabilities, capital, incomes and expenses
4. Measurement of the elements using different values such as historical cost, value, present value and replacement value
5. Purpose and status of the framework such' as providing guidance on standard setting and does not override the requirements of a standard.
6. Recognition of elements in financial statements i.e. whether changes in future of economic resources will be affected.
7. Concepts of profit and capital maintenance like financial and physical
marto answered the question on February 13, 2019 at 08:19