Chapter 2 of our class discusses the conceptual framework for financial reporting. It is the general set of principles and rules that guide our creation of accounting standards. This framework has an effect on how the accounting standard setters developed the guidance that we will discuss in every chapter after that. Your task is to create a concept map that links the qualitative characteristics, elements, and foundational principles introduced in chapter 2, to the content we learn through the remainder of the semester.

For example, how do the Fair Value and Historical Cost principles affect the accounting for PP&E in chapter 10? Your concept map should start with Conceptual Framework, and stemming from that start point should have sections called Qualitative Characteristics, Elements, and Foundational Principles. You should also link concepts between the chapters after chapter 2. For example, chapter 6 has to do with revenue recognition, and therefore could be linked in a few different ways to the financial statement chapters (4 and 5). Further, recognition of revenue often results in creation of an account receivable, which we deal with in chapter 7. Generating this concept map will ensure you have a deep understanding of how the elements of accounting interact with each other. Your understanding of the accounting cycle from previous accounting courses will assist you in building your map.