Compare and cotrast the accounting conceptual framework and the Essay

Compare and cotrast the accounting conceptual framework and the accounting regulatory framework in the Uk - Essay Example The accounting conceptual framework in the UK One of the elements of the accounting conceptual framework, as applicable in the United Kingdom, relates to goal of financial statements that is to offer information on â€Å"financial position, performance and changes in financial position† of an enterprise (Rolfe 2006, p. 123). The subject information must however be significant to the entity’s stakeholders. Three documents, financial statements meet the objectives. Cashbook reports an entity’s financial position, income statement reports financial performance and cash flow statement reports and entity’s change in financial position. Basic assumptions in accounting are another set of factors that form elements of accounting framework. The framework identifies two assumptions: the going concern, an assumption that an entity will exist until unforeseeable future and upon which accounts are prepared, and accruals basis, a requirements that value in transactions are realized as soon as the transactions occur and not money on the transactions are received of remitted. Another element of the accounting framework relates to property of financial information and the framework identifies â€Å"understandability, relevance, reliability, and comparability† (Rolfe 2006, p. 124). These properties require that financial information be simple enough for users to understand, identify with users’ needs, be consistent, and offer a basis for comparison with the entity’s longitudinal information of comparison with other entity’s information (Rolfe 2006, p. 123, 124). The accounting conceptual framework also lists composition of financial statements. The balance sheet discloses an entity’s financial positions and items’ balances that contribute to the position. Assets, capital, and liabilities constitute the balance sheet. The income statement that discloses an entity’s sources of revenues and expenditure is another element of financial statements and shows an organization’s financial performance in a period. Statement of shareholders’ equity that illustrates changes in capital, and disclosures that concerns these statements is other components of financial statements (Rolfe 2006, p. 125, 126). Recognition and measurement are other aspects of the framework and required numerical disclosure of value of items and narratives that describe the numerical values (Weil 2012, p. 22; Spiceland, Sepe and Nelson 2013, p. 19). Treatment of capital and management of capital items are other aspects of the conceptual framework. The United Kingdom adopts financial approach to treatment of capital, an approach that recognize profit or loss on capital based on the difference between value of a capital at the end of an accounting period and the corresponding value at the beginning of an accounting period (Bellandi 2012, p. 271). The conceptual framework serves multiple purposes in accounting . It helps the accounting board in its role of reviewing current financial reporting standards and in formulating the standards for future applications. The accounting fram