Question

In addition to issuing accounting standards, the FASB has formulated a conceptual _______ to provide an underlying theoretical and conceptual structure for accounting standards.

Answer 1

Answer:

Framework

Explanation:

Accounting theories are usually bound together by an appropriate conceptual framework. The conceptual framework provides or becomes the basis of the concepts and theories that underline any set of accounting standards that govern the financial practices of businesses in an area.

The Financial Accounting Standards Board, has defined the objectives of financial reporting especially by business organisations within the private and public sector. The underlying theories and concepts that guide these defined and outlined standards for financial reporting set by the FASB is clearly defined in its Conceptual Framework.

Once, there are changes in underlying accounting theories, these are clarified in the framework before they become a standard for financial reporting.