The paper 'Qualitative Characteristics of Accounting Reports Addressed by Conceptual Framework" is a good example of a finance and accounting coursework. A conceptual framework is an analytical instrument used to capture real ideas and to put them in a memorable way as applied in accounting theory. In this essay, I will deal with the qualitative characteristics of accounting reports addressed by the conceptual framework. The important characteristic advantage of the theoretical framework is that the conceptual framework has delivered benefits. The following are important characteristics of financial reports addressed by the conceptual framework; it addresses the relevance conceptual accounting report and acts on materiality.
This aspect makes financial reports relevant (Atrill, et al, 2012). The magnitude and quantity of materiality make statements more relevant. Comparability is enabled by conceptual reports. it does so by finding similarities and differences of items. It identifies this within periods of various financial reports. This helps to prepare consistent and well-defined values. Verifiability; conceptual framework enhances insightful and independent observations. This quality makes observers have one particular view. This boosts the trustworthiness of a financial report. Faithful representation; it must provide information about the material it is supporting.
Conceptual framework enhances complete, neutral and free from error. This will promote the trustworthiness of the report. The complete item should have depictions and explanation. it also explains the qualities and nature of the items (Deegan, 2012). Neutrality is not bias hence free from manipulation; it promotes all aspects of reports without elimination or addition. Liabilities are not removed and expenses are not understated. Income is also not raised. Argument Timelessness as per the conceptual framework can lead to alteration. It leads to the precision of sources influencing decisions.
This makes financial reports more precise and enhances accuracy, Understandability; the conceptual framework has concise, clear and material. This material can easily be understood. This makes financial reports effective during the presentation. Therefore, the theoretical framework substantiates financial reports making them understandable. Reliability; conceptual framework questions the source of information of the items. This makes financial reports trusted and, therefore, making the financial reports reliable every time the reports are presented (Henderson, 2013). This boosts the integrity of financial reports. This quality is thus addressed by the conceptual framework. Comparability is important in these characteristics.
It promotes the mathematical view of the reports. This is done by establishing differences and similarities in the reports. Differences bring about how far quantitatively an item is far from the other. This brings about the magnitude of the material. The differences make reports have enhanced material ability. Similarities bring equality in various financial reports. This is important in that financial reports which are the same can be used to predict the future so that planning of those items can easily be done. In other areas where the elements are similar, they can be transferred directly. The advantages of a conceptual framework are as follows; it creates clarification as verifies items making it clear for the observers to internalize what they observe.
A clear financial report forms a proper understanding, therefore leading to a consensus within the observers’ minds. Conceptual reports enhance profit. Financial reports with its items properly verified lead to minimal losses due to its reliability a rise in the items can be detected and invested in the correct way. It prevents losses in that there is no exaggeration of liabilities and expenses are correctly recorded.
Conceptual reports create trust as there is no manipulation of data recorded. This creates a conducive environment for a thriving business. Its aspect of similarity and differences by comparing prevents losses is vital in that when items of one place and that of another are compared and found to be tallying, then there is no point of repeating next time.
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