CFAS CHAPTER 2

To assist regulatory agencies in issuing rules and regulations for a particular industry.

The Conceptual Framework applies only when the IASB develops new standards.

The objectives and concepts for use in developing standards of financial accounting and reporting.

Decision usefulness

Define the basic objectives, terms and concepts.

Business entities will need far less assistance from accountants.

The Conceptual Framework should be based on fundamental truth derived from law

To assist the International Accounting Standards Board in the standard-setting process.

To assist the Board of Accountancy to promulgate rules and regulations affecting the accountancy profession.

Creditors, government agencies and unions

Existing and potential investors, lenders and other creditors

Board of Directors

Investors

Employees

Lenders and other creditors

Customers

Governments and their agencies

The public

To provide information useful to assess the amount, timing, and uncertainty of prospective cash receipts.

Information useful in assessing cash flow prospects.

Over the long run, trends in revenue and expenses are generally more meaningful than trends in cash receipts and disbursements

It provides a better indication of ability to generate cash flows than cash basis.

Current earnings based on accrual accounting

Predicting the long-term financial performance.

The needs of the users of the information

To provide information about assets and claims against the assets

Individual business entities, rather than to industries or an economy or to members of society as consumers.