Conceptual Framework Essay

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 (Abend, 2008). Three consistent themes related to these adults’ educational experiences emerged from the data: (a) unfinished business, (b) cutting the mustard, and (c) a sense of legacy (Aagard, Antunez, and Sand, 2015).

> The cost principle requires that companies record plant assets at cost. Cost consists of all expenditures necessary to acquire an asset and make it

According to Kimmel, Kieso and Waygandt (2011), "the revenue recognition principle requires that companies recognize revenue in the accounting period in which it is earned." Basically, this means that revenues should be recognized (or in other words recorded) on completion of the process of revenue generation i.e. once revenue has been earned. This is as per the accrual basis of accounting. Essentially, revenue recognition derives its significance from its utilization when it comes to the determination of the specific accounting period in which earnings should be recorded.

Information based on accrual accounting has historically and empirically provided a better indication of a company’s ability to generate cash flows than information gathered under the cash method. If there is not inter-period allocation, then the information is not as meaningful and will result in a mismatching of economic benefits

In spite of its weaknesses, the cost principle is most often used because it is the most reliable basis of valuation.

11. Accelerated methods of amortization result in a periodic amortization charge that is less in each succeeding period than the prior period. There are a number of variations of the accelerated methods, such as the declining balance method and the sum-of-the-years’-digits method. These methods are appropriate when an asset contributes to revenue

|  periodicity. (Correct! Periodicity is not one of the basic principles of accounting information systems.)

The IASB and FASB are working on a joint project to develop a common conceptual framework which based on the existing conceptual framework underlying FASB and IASB. The objective of the measurement phase “is to provide guidance for selecting measurement bases that satisfy the objectives and qualitative characteristics of financial reporting” (FASB, 2009b). In fact, the IASB’s framework defines measurement as the process of determining the monetary amounts that are recognized in financial statements (IASB, 2001) whereas FASB’s framework separates measurement into selection of the monetary unit and choice of attribute (SFAC 5, 2008). This indicates that both framework do not provide identical measurement, neither provide much guidance on measurement (IASB, 2004a). Thus measurement is the most challenging components that which has not been reached

Revenue recognition is a significant issue in accounting because of integrity and fairness in the financial statements that are depended upon by investors, creditors, and other financial statement users. When revenue is not properly recognized in financial statements, material misstatements can occur, which misleads users. Even though the matching principle is not the same as revenue recognition, it is related in the sense of matching expenses spent to revenues earned from the expenses, or revenues to expenses that generated the revenues.

We, as accountants, work within a framework that defines a numerical view of reality. Our understanding of organization and management is influenced by different images and insights generating from the subject of our investigation (Davis, Menon and Morgan, 1982, pp. 307–318).

Conceptual framework is a theory of accounting prepared by a standard setting body against which practical problems can be tested objectively. In addition the business dictionary states that conceptual framework is a theoretical structure of assumptions, principles and rules that hold together the ideas compromising a broad concept. Other sources state that a conceptual framework can be viewed as a set of interrelated objectives and theoretical principles, which forms a reference for the underlying discipline. On the other hand, financial reporting is the process of producing statements that disclose an organization's financial status to management, investors and the government. Therefore, in financial reporting the framework provides information

A Conceptual Framework can be defined as a system of concepts and purposes that guide to the creation of a constant set of regulations and standards. Especially in accounting, the rule and standards set by the nature, function and limit of financial accounting and financial statements. The purpose of the Conceptual framework is to enhance financial reporting and objective of accounting by offering a more accomplish, clear and updated set of concepts or guidelines. In Conceptual Framework, it will form a basis for define how transactions should be calculated (historical value or market value) and reported in financial report like how they are presented or communicated to internal or external users. To carry out this, the International Accounting Standards Board (IASB) is establishing on the currently existing Conceptual Framework updating it, enhancing it and padding it in the disparity instead of essentially reconsidering all respects of the Conceptual Framework. Conceptual Framework helps the International Accounting Standards

temporal method, and the current rate method. The underlying principle of the current/non-current method is that assets and liabilities should be translated

The revenue recognition principle is a foundation of accrual accounting and one of the main principles of GAAP. The revenue recognition principle is a set of guidelines that helps accountants to identify when a revenue event has taken place and how to appropriately record cash exchanges before, during, and after the revenue event. According to the revenue recognition principal, revenue must (1) be realized or realizable and (2) earned, in order to be recognized. According to the SEC revenue is realized when (1) Persuasive evidence of an arrangement exists, (2) Delivery has occurred or services have been rendered, (3) The seller’s price to the buyer is fixed or determinable, and (4) Collectability is reasonably assured. It is essential

2. The money-measurement assumption which assumes that purchasing power of rupee is stable is a major limitation of the cost concept.