Lecture 1 Conceptual Framework Flashcards
Study
What are the three benefits of the conceptual framework
Political, technical and professional.
What are the problems with the conceptual framework?
It is too ambiguous - principles are too vague and there is too much room for alternative interpretations
Too descriptive and not prescriptive - simply describes accounting practices. Should be prescriptive (normative and try to improve practice)
Describe technical benefits
Improves accounting practice and provides basics for answers to specific q’s and problems -
- providing a basis and guidance for those who set the specific accounting rules.
- helping individuals involved in preparing or auditing or using financial statements.
Describe political benefits
- Prevent political interference in setting accounting standards.
- Accounting information has significant real-world effects.
Describe professional benefits
Protect the professional status of accounting and accountants.
What are the 8 chapters of the conceptual framework
Chapter 1 - The objective of financial reporting
Chapter 2 - Qualitative characteristics and useful financial information
Chapter 3 - Financial statements and the reporting entity
Chapter 4 - Elements of Financial Statements Income Expense and Equity etc
Chapter 5 - Recognition and derecognition
Chapter 6 - Measurement
Chapter 7 - Presentation and Disclosure
Chapter 8 - Concepts of Capital and Capital Maintenance
What are the 5 W’s
What are the purpose of financial statements
Who are the financial statements prepared for
What are the assumptions made when preparing them
What type of information should be included
What are the elements of financial statements
What is the deal with heritage assets?
May not reflect financial value
Disposal by sale is prohibited or severe restrictions
Value may increase over time
Difficult to estimate useful life
IPSASBCFW public sector entities - measurement has objective to reflect operational capacity.
