Class 3 Slides

Question 1

What is the Conceptual Framework?

Answer 1

1. a blueprint for accounting theory
2. the foundation for GAAP
3. A general frame of reference

Question 2

Why do we need a conceptual framework in accounting?

Answer 2

1. Improved communication and better understanding
2. Defense against political pressure as CF adds credibility to financial reporting
3. To maintain consistency with overall objectives of financial reporting
4. Economizing effort (no need to reinvent the wheel)