This book focuses on the conceptual framework developed by the Financial Accounting Standards Board to provide a foundation for financial accounting and reporting standards in the United States.

Accountants in the United States have pioneered what is known as financial accounting standard setting.  Many years ago, academic and practicing accountants, in efforts to improve financial disclosure by publicly held corporations, began to emphasize the idea that financial accounting possessed “principles” that were widely recognized and accepted within the profession.  Although most accountants interested in the search for accounting principals have essentially agreed that such principles do indeed exist, a complicating factor in ensuing attempt to formally identify them has been the persistence of two competing views of accounting principles: one maintaining that accounting principles are based on what is generally done in practice and the other holding that a foundation (“framework”) of fundamental premises (“concepts”) necessarily underlies and determines sound practice.

That conceptual framework is the focus of this book, but other steps are also significant parts of its subject matter.  To understand what the conceptual framework is and why it developed as it did entails understanding the environment in which the principles and standards of financial reporting developed, the forces that shaped them, and how the concepts, principles, and standards relate to each other.  That knowledge also helps explain the circumstance that while the idea of a conceptual framework generally has been favorably received, the standards that have resulted from its application often have met with significant resistance. 

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