An accounting conceptual framework can be defined as

An accounting conceptual framework can be defined as -...

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October 27, 2011 DE’SHUN MOSS- CONDELL ACCOUNTING THEORY 315 9-10 A) Accounting concepts and conventions as used in accountancy are the rules and guidelines by which the accountant lives. The historical cost accounting convention is an accounting technique that values an asset for balance sheet purposes at the price paid for the asset at the time of its acquisition. GAAP requires that assets on the balance sheet be are recorded at historical costs until sold. Since everyone in the U.S. is currently required to follow the historical cost principle, users of financial statements understand where the asset values are coming from: the price originally paid for the asset (less any depreciation where applicable). Accounting data is not absolute or concrete. Considerable amounts of judgment and estimation are necessary to develop the specific accounting measurements that are reported during a particular month, quarter, or year. The only way around the problem of utilizing estimation in accounting is to wait until all facts are known with certainty before issuing any reports. Thus, in order to timely present information, it is considered to be far better to embrace reasonable estimations in the normal preparation of ongoing financial reports. As such, many transactions and events are reported based upon the historical cost principle (in contrast to fair value). This principle holds that it is better to maintain accountability over certain financial statement elements at amounts that are objective and verifiable, rather than opening the door to random adjustments for value changes that may not be supportable. For example, land is initially recorded in the accounting records at its purchase
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This note was uploaded on 02/02/2012 for the course ACCOUNTING Acc632 taught by Professor Marry during the Spring '10 term at College of the Bahamas.

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An accounting conceptual framework can be defined as -...

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