Session 2 - FASB's Conceptual Framework (Essay) Flashcards Preview

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Flashcards in Session 2 - FASB's Conceptual Framework (Essay) Deck (3)
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1
Q

What is a Conceptual Framework?

A

A blueprint for accounting theory
Foundation of GAAP
A general frame of reference

2
Q

Why do we need a Conceptual Framework in accounting?

A

(a) Improved communication and better understanding
(b) Defense against political pressure: CF adds credibility to financial reporting
(c) To maintain consistency with overall objectives of financial reporting
(d) Economizing effort: no need to reinvent the wheel

3
Q

2 Primary Qualities of Accounting Information

A

Relevance & Reliability