Conceptual Framework

1208 WordsSep 20, 20115 Pages
Abstract This essay protrudes the objective of general purpose financial reporting (GPFR) as edged in the conceptual framework. The essay instigated with a brief history and development of conceptual framework which comprises Statement of Accounting Concepts. Apart from that, the essay also clarifies on how the financial information is essential for the users as stated in the SAC 2, for decision making purposes. Additionally, an illustration of the relationship between the SACs and how they are interrelated to fulfil the objective of general purpose reporting is pictured. Introduction The Conceptual Framework adopts financial reporting as issued by the Financial Accounting Standards Board (FASB) of USA. The standards were placed in…show more content…
The GPFR draws an outline for these users to discern the ability of the entity to continue their production. The financial information such like cost of goods sold determines these aspect. This is also essential when business entity seek for alternative supplier for instance when there is no constructive cash flow into the entity. As for non-business entity they are concerned for the welfare of the society. Aspects such as appropriate resource management and the corporate who governs the entity, eventually affect the voting penchant and representation, for example, the parliament. * Parties performing a review or oversight function These users care for the benefit of the members within the entity and they are no forfeiture and the members perform in liberation. As to fulfil the condition, the users can impose or review the guidelines for the entity. In some cases they even can demand for special purpose report to execute this purpose. As stated by Deegan in 2005, SACs states that the aim of general purpose reporting (GPFR) is to provide relevant and reliable information (para. 11) to assist report users to make and evaluate decisions about the allocation of scarce resources (para. 26) and to enable management and governing bodies to discharge their accountability (para 14). In conjunction of disclosure of information in paragraph 45, SAC 2 requires GPFR provide information ‘relevant to the assessment,

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