The IASB has developed a conceptual framework for finance accounting and reporting. The Framework sets forth the objective and fundamentals that will be the basis for developing financial accounting and reporting standards. The objective identifies the purpose of financial reporting. The fundamentals are the underlying concepts of financial accounting that guide the selection of transactions, events, and circumstances to be accounted for; their recognition and measurement; and the means of summarizing and communicating them to interested parties.

The characteristics or qualities of information discussed in the framework are the concepts that make information useful and the qualities to be sought when accounting choices are made.

Instructions

(a) Identify and discuss the benefits that can be expected to be derived from the IASB’s Framework.

(b) What is the most important quality for accounting information as identified in the Framework? Explain why it is the most important.

(c) Briefly discuss the importance of any three of the fundamental characteristics or enhancing qualities of accounting information.