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The purpose of having an accounting theory is to provide a framework for evaluating current financial accounting practice and also for developing new practices and procedures. These theories are often referred to as conceptual frameworks. Conceptual frameworks are composed of principles and rules, which guide accountants in drawing up financial reports/statements. ...
As there were no conceptual frameworks, many problems arose. Accounting practices were different and not consistent. Comparisons between companies and within the same company over time were difficult as companies changed accounting procedures to present a picture of profitability and growth (being biased). ...
There have been many disagreements in accounting as there is no single generally accepted conceptual framework. The aim of standardisation is to eliminate the problems caused by the variety of accounting practices.
There have been several bodies throughout the world who have been concerned with setting conceptual frameworks or a set of principles which can be used as a guidance in areas where no accounting standards exist. The Financial Accounting Standards Board (FASB) in the USA tried to create one of the first frameworks. Even after mass spending in the 1970s and mid-1980s there were still a lot of difficulties in producing the conceptual framework. The approach that the FASB used had great influence on other accounting standards setting bodies in other countries, which led to their attempts.
Approximate Word count = 1011
Approximate Pages = 4
(250 words per page double spaced)
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