Without conceptual framework there have been many issues and problems that have emerged with the passage of time and different people have different opinions on solving the problem (Hines, 1988). Therefore there has been a need for some guiding principles or some kind of structure on the basis of which different decisions can be taken and reporting of financial statements could become reliable and consistent (Zeff, 1972). With regard to this, conceptual framework is helpful because it provides a guideline and a foundation of anything and it can be referred to by people (Nobes, 2006).
Conceptual framework issued by FASB
The following image gives an overview of the conceptual framework issued by FASB. In an ideal world accounting reports that are developed using the suggested conceptual framework would be more useful than other accounting reports which are prepared without using of conceptual framework. ...Show more