Difference between conceptual framework and regulatory framework
Answers
Conceptual Framework. A conceptual framework for financial accounting is an accounting theory that is prepared by a body which sets standards. This body sets the standards to test problems that are practical, objectively. A conceptual framework plays a significant role in issues that concern financial reporting.A conceptual framework for financial accounting is an accounting theory that is prepared by a body which sets standards. This body sets the standards to test problems that are practical, objectively. A conceptual framework plays a significant role in issues that concern financial reporting These are statements that have been placed authoritatively to manage financial reporting. Accounting standards can be recognized as the chief source of what is accepted and regarded as accounting principles. Accounting standards dictate how various types of transactions and events should reflect in financial statements. These standards have been put to ensure that investors and all stakeholders- including lenders – are provided with financial information.
Accounting standards outline how transaction and all financial activities should be conducted, analyzed, and presented in financial statements. They are a component of the accounting framework, and they help accounting practitioners to make use of the accounting practices in the most advantageous way possible. Accounting standards are also important as they help companies and the managers to justify the practices they used to make financial statements-in case a loss was realized.
Accounting standards describe the problem that needs to be solved. They then provide a platform to discuss the best way to handle the problem, and finally describe the solution that is in tandem with the accounting practices.