Answer
Ideally, a conceptual framework can be viewed as a system of ideas or even objectives that usually leads to the creation of a consistent set of rules and standards and specifically in accounting where the rules and standards set the nature, functions as well limits of the financial accounting and reporting practices.
Conceptual framework is of great importance in financial accounting due to the following:
i. Conceptual framework helps the FASB to issue out more up-to-date, consistent and useful standards concerning the financial accounting practices.
ii. Conceptual framework makes it more easier to solve arising issues since it makes the whole process easier to solve through referencing to an existing framework of basic applicable theory.
Work Step by Step
Additionally, conceptual framework increases the financial statement user's capability and understanding of and at the same time confidence in financial reporting. Its also important to note that, it enhances comparability among companies' financial statements and as a result it brings about the ability to draw inferences.
