What is conceptual accounting?

The accounting of the conceptual framework provides an accounting institute regarding the record and reporting of financial information. There are two main bodies to set up and manage the conceptual framework. The Council for Financial Accounting Standards (FASB) and the Council for International Accounting Standards (IASB) set a framework for the United States and International countries. Both agencies have set basic objectives, define key concepts, and determine the basic principles or concepts that are their own conceptual accounting of the framework. Each authority issues a set of principles that provide accountants a set of qualitative characteristics for their accounting principles.

FASB problem Generally accepted accounting principles (GAAP) as their primary conceptual accounting principles. Inherent properties include meaning, reliability, comparability and consistency. The first two features ensure accounting information provides support for decision -making and BOTH is verifiable and faithful representation of the company's financial data. The last two features are secondary to the first two. You fromThey ensure that accounting information is comparable to several companies and the company applies the principles in the same way as similar events during normal business operations.

IASB issues international financial reporting standards (IFRS) for the use of a large range of international countries. Due to its wide use in these countries, the IFR contains very specific instructions in their principles of accounting of the conceptual framework. Two basic prerequisites are historical costs and constant purchasing power of items. The first requires companies to record all transactions using historical costs, that is what the company has paid for the item in the previous period. The second principle ensures that companies do not deal with financial capital maintenance, which gives the financial accounting of RTS at the time of hyperinflation.

iFRS have similar qualitative characteristics to GAAP for accounting veilčěrka. IASB requires the statement to be understandable, reliable, comparable and relevant. This ensures that the published financial statements are a real and fair view of the financial situation of the company. The accounting principles of the conceptual framework allow these characteristics to be their own financial information by the Company when followed by IFRS.

Companies can generally choose the method of accounting of the conceptual framework depending on the laws of their country. The purpose of selecting an established framework is to place accounting information on the same basis as other companies. In addition, the parties involved have the assurance that the company has sufficient measures to avoid fraud and abuse of the information specified in the company's financial statements. Companies with large international operations often use IFRS, so their information corresponds to international competitors. The United States requires the use of GAAP by all domestic companies.