Introduction to the Conceptual Framework
What Is the Conceptual Framework?
The Conceptual Framework is a coherent system of objectives and principles developed by the Financial Accounting Standards Board (FASB) to guide the creation and application of accounting standards. Rather than providing detailed accounting rules, it establishes the underlying concepts that ensure financial reporting is consistent, useful, and logically developed.
- Provides a foundation for developing accounting standards.
- Helps resolve accounting issues not specifically addressed by GAAP.
- Promotes consistency and comparability in financial reporting.
- Improves users' understanding of financial statements.
Note
The Conceptual Framework is not a GAAP standard itself but serves as the basis for developing GAAP.
Summary
The Conceptual Framework provides the theoretical foundation that supports all financial reporting standards under U.S. GAAP.