Therefore, the users and preparers of financial statements seeks information from annual reports to satisfy their own information needs to make decisions.
However in order to prepare a “qualify” financial reporting and adequate info for better decision making, financial statements must be prepared according to the accounting requirements. Accounting requirements or accounting standards in other words means an authorative statements that guide the preparation of financial statements.
This in turns, leads back to conceptual framework because accounting standard is created with the guidance of conceptual framework. Before going into how does it help users and preapres to understand financial statements & accounting requirements. We need to understand the difference between accounting standard and conceptual framework. Conceptual framework’s principles are general concepts and is designed to provide guidance and apply to a wide range of decisions relation to the preparation of financial reports. Accounting standards on the other hand, provide specific requirements for a particular area of financial reporting. Eg: Conceptual framework – defines what an asset is & when it should be included in the financial statements
Ace standards – on leases ( 1AS17 or AASB 117) contains detailed requirements and guidance on when an... [continues]
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