Module 2 Conceptual Frameworks and Accounting Standards PDF
Module 2 Conceptual Frameworks and Accounting Standards PDF
Module 2 Conceptual Frameworks and Accounting Standards PDF
Course Description: Conceptual framework is a system of ideas and objectives that lead to the
creation of a consistent set of rules and standards. In accounting the rule and standards set the
nature, function and limits of financial accounting and financial statements. This may also assist
preparers of financial statements in developing accounting policies for transaction or events not
covered by existing standards.
MODULE 2
Learning Objectives
1. Define the conceptual framework and understand its rationale, purpose and scope.
2. Understand the objective of general-purpose financial reporting and the types of useful
information.
3. Describe the limitations of general-purpose financing reporting guide.
4. Identify the fundamental qualitative characteristics of financial information.
5. Know how the qualitative characteristics of financial information can be enhanced.
6. Describe the basic assumption underlying PFRS as well as other environmental
assumption affecting it.
The conceptual framework provides a strong theoretical foundation and allows for the
systematic adaptation of accounting standards for a changing business environment. It aids in
an organized and consistent manner development of new accounting standards and allows one
to understand and perhaps anticipate future standards.
The Conceptual Framework sets out the fundamental concepts for financial reporting that guide
the Board in developing IFRS Standards. It helps to ensure that the Standards are conceptually
consistent and that similar transactions are treated the same way, so as to provide useful
information for investors, lenders and other creditors.
The Conceptual Framework also assists companies in developing accounting policies when no
IFRS Standard applies to a particular transaction, and more broadly, helps stakeholders to
understand and interpret the Standards.
a) To assist the IASB in the development of future IFRSs and in its review of existing
IFRSs;
g) To provide those who are interested in the work of IASB with information about its
approach to the formulation of IFRSs.
The objectives identify the goals and purposes of financial reporting and the fundamentals
are the underlying concepts that help achieve those objectives
There are four main financial statements. They are: (1) balance sheets; (2)
income statements; (3) cash flow statements; and (4) statements of shareholders'
equity. Balance sheets show what a company owns and what it owes at a fixed
point in time.
To help external users assess the amounts, timing and any uncertainty about the
future net cash inflows of the company, the following types of information have
been identified:
Measurability. Accounting only takes into account transactions that are capable
of being measured in monetary terms. Therefore, financial statements do not
account for those resources and transactions whose value cannot be reasonably
assigned such as the competence of workforce or goodwill.
References:
Balatbat Cabrera Ma. E. , Royo Ocampo Reynaldo, B. Cabrera Gilbert Anthony, (2018-2019 Edidtion)
Conceptual Framework and Accounting Standards.
https://www.google.com/search?q=purposes+of+the+conceptual+framework&rlz=1C1AWFC_enPH817
PH817&oq=purposes+of+the+conceptual+framework&aqs=chrome..69i57.46490j0j7&sourceid=chrome
&ie=UTF-8
https://www.iasplus.com/en/meeting-notes/iasb/2013/february/cf-purpose-and-status
https://www.google.com/search?rlz=1C1AWFC_enPH817PH817&sxsrf=ALeKk00ddQKD0DxuuNgz44nKffl
EPBsp3Q%3A1594558866782&ei=kgkLX9GkL--
Gr7wPrpC8yAg&q=overview+of+conceptual+framework&oq=overview+of+conceptual+framework&gs_l
cp=CgZwc3ktYWIQAzIECAAQRzIECAAQRzIECAAQRzIECAAQRzIECAAQRzIECAAQRzIECAAQRzIECAAQR1AA
WABgmkVoAHABeACAAQCIAQCSAQCYAQCqAQdnd3Mtd2l6&sclient=psy-
ab&ved=0ahUKEwjRtc_W4sfqAhVvw4sBHS4ID4kQ4dUDCAw&uact=5
https://www.fasb.org/jsp/FASB/Page/BridgePage&cid=1176168367774
https://www.google.com/search?rlz=1C1AWFC_enPH817PH817&sxsrf=ALeKk00c8tIZGB-
_JWMcpUyDRzbMyTf9Gg%3A1594558876995&ei=nAkLX8KYPIKlmAWR2rv4Bw&q=scope+of+the+conce
ptual+framework&oq=scope+of+the+conceptual+framework&gs_lcp=CgZwc3ktYWIQARgAMgIIADIICAA
QBxAFEB46BggAEAcQHjoICAAQCBAHEB46BAgAEA06BAgAEB46BggAEAUQHjoGCAAQCBAeUI8mWKFbYL
CTAWgAcAB4AIABlwGIAeoGkgEDNy4ymAEAoAEBqgEHZ3dzLXdpeg&sclient=psy-ab
https://www.google.com/search?rlz=1C1AWFC_enPH817PH817&sxsrf=ALeKk02wQIYYKQdeMNjy4OulM
WS7HNebkw%3A1594559152685&ei=sAoLX4iyKYe1mAXgkoewAg&q=objective+of+general+purpose+fi
nancial+reporting&oq=objective+of+gene&gs_lcp=CgZwc3ktYWIQARgAMgIIADICCAAyAggAMgIIADICCA
AyAggAMgIIADICCAAyAggAMgIIADoHCCMQ6gIQJzoECCMQJzoFCAAQkQI6BAgAEEM6CAgAELEDEIMBOg
UIABCxAzoNCAAQsQMQkQIQRhD5AToHCAAQsQMQQ1DB-
QJYvukDYNumBGgBcAB4AIABqwGIAYsOkgEENy4xMJgBAKABAaoBB2d3cy13aXqwAQo&sclient=psy-ab
https://accounting-simplified.com/financial/introduction/limitations-of-accounting-and-financial-
reporting.html
https://www.google.com/search?rlz=1C1AWFC_enPH817PH817&sxsrf=ALeKk02f5gaLg6H6dPWxpNgqojI
MgcuM5g%3A1594570165275&ei=tTULX6qpEMeymAXevLxA&q=%E2%80%A2%09Underlying+Assumpti
on%3A+Going+Concern&oq=%E2%80%A2%09Underlying+Assumption%3A+Going+Concern&gs_lcp=CgZ
wc3ktYWIQAzIGCAAQFhAeOgQIABBHOgcIIxDqAhAnUMSyBViQzwVgkPAFaAFwAXgAgAGBAYgBgQGSAQ
MwLjGYAQCgAQGgAQKqAQdnd3Mtd2l6sAEK&sclient=psy-
ab&ved=0ahUKEwjq15TijMjqAhVHGaYKHV4eDwgQ4dUDCAw&uact=5