The Financial Accounting Standards Board, the official accounting standard-setting body of U.S.A., consults the Conceptual Framework to address issues in general regarding financial reporting as well as seek its guidance for the development of new accounting standards. This paper discusses the FASB Conceptual Framework in an encompassing manner: starting off with defining the Framework, then briefly discussing its evolution through the years, followed by presenting the Framework as a hierarchy and explaining its different levels, and concluding through a juxtaposition of the FASB and IASB Frameworks.
FASB Conceptual Framework: A Definition
According to the Financial Accounting Standards Board or FASB, the Conceptual Framework or Concepts Statements is a collection of â€œinterrelated objectives and fundamentalsâ€ relevant to financial reporting (Financial Accounting Standards Board, n.d.). Specifically, the objectives contained in the Framework pertain to the goals and purposes of financial reporting, which is considered the ultimate stage of Accounting. Additionally, the fundamentals refer to the necessary concepts that contribute to achievement of financial reporting objectives. More information about these concepts within the Framework will be tackled in latter discussions.
FASB Conceptual Framework: Evolution through the Years
The Framework has been in existence for only less than a century. This suggests that, unlike the at least 500-year old Accounting profession dating back to Fra Luca Pacioliâ€™s time in 1494 (Schroeder, Clark, & Cathey, 2017), the Framework did not exist until circumstances necessitated the need to have guiding concepts in developing standards.
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FASB Conceptual Framework: The Beginnings
William A. Paton and John B. Canning were attributed to making the first attempts in developing the Conceptual Framework. Paton proposed in his book in 1922 â€œa restatement of the theory of accounting consistent with the conditions and needs of the business enterprise par excellence, the large corporation.â€ As for Canning, in his doctoral dissertation in 1929, he developed and presented guidance for valuing and measuring assets based on future expectations (Zeff, 1999). These works by Paton and Canning encouraged many writers and scholars to add to existing literature of Accounting since then.
FASB Conceptual Framework: At Present
The usefulness of the Conceptual Framework to FASB cannot be denied. The Framework assists the Board by:
â€¢ Providing a set of common premises as a basis for discussion
â€¢ Providing precise terminology
â€¢ Helping to ask the right questions
Limiting areas of judgment and discretion

â€¢ In proper General Journal format, record the transactions for t...