Conceptual Framework: Elements


The Conceptual Framework is a body of interrelated objectives and fundamentals. The objectives identify the goals and purposes of financial reporting and the fundamentals are the underlying concepts that help achieve those objectives. Those concepts provide guidance in selecting transactions, events, and circumstances to be accounted for, how they should be recognized and measured, and how they should be summarized and reported. A Statement of Financial Accounting Concepts is nonauthoritative and does not establish or change generally accepted accounting standards.

On December 22, 2021, the Financial Accounting Standards Board (FASB) issued FASB Concepts Statement No. 8, Conceptual Framework for Financial Reporting—Chapter 4, Elements of Financial Statements.

Chapter 4 defines elements of financial statements to be applied in developing standards for both business and not-for-profit entities. These elements provide a foundation for information that is relevant to the objective of financial reporting—namely, to provide financial information about the reporting entity that is useful to existing and potential investors, lenders, and other creditors in making decisions about providing resources to the entity. Chapter 4 supersedes Concepts Statement No. 6, Elements of Financial Statements.

Additional Information: