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Accounting

Describe the conceptual framework of accounting principles.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter1: Accounting As A Tool For Managers

Section: Chapter Questions

Problem 6Q: What is the purpose of management accounting?

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Question

Describe the conceptual framework of accounting principles.

Expert Solution

Step 1

The conceptual framework can be defined as a system of ideas and objectives that lead to the creation of a consistent set of rules and standards. Specifically in accounting, the rule and standards set the the nature, function and limits of financial accounting and financial statements.

The main reasons for developing an agreed conceptual framework are that it provides:

a framework for setting accounting standards;
a basis for resolving accounting disputes;
fundamental principles which then do not have to be repeated in accounting standards.

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