“Some people argue that there is no need for a general theory of accounting, as established in a conceptual framework. They say there is no overall theory of physics, biology, botany or psychology, so there is no need for an overall theory of accounting. Furthermore, attempts to develop such a theory are futile and unnecessary, since accounting has not needed a conceptual framework so far”(Godfrey, Hodgson, Holmes & Tarca, 2006, p.439). Identify some of the perceived advantages and disadvantages that arise from the establishment and development of conceptual frameworks.

Information is considered material if:     it would have a bearing on decisions of those who use the financial statements.     there is a substantial likelihood that a reasonable investor would not be concerned about the information.     an item is so insignificant that users would likely ignore it.     the FASB explicitly rules the transaction or item to be material.

Wayne Cooper has some questions regarding the theoretical framework in which IFRS is established. He knows that the IASB has attempted to develop a conceptual framework for accounting theory formulation. Yet, Wayne Cooper's supervisors have indicated that these theoretical frameworks have little value in the practical sense (i.e., in the real world). Wayne Cooper did notice that accounting rules seem to be established after the fact rather than before. He thought this indicated a lack of theory structure but never really questioned the process at school because he was too busy doing the homework. Wayne Cooper feels that some of his anxiety about accounting theory and accounting semantics could be alleviated by identifying the basic concepts and definitions accepted by the profession and considering them in light of his current work. By doing this, he hopes to develop an appropriate connection between theory and practice. Instructions: Help Wayne Cooper recognize the purpose of a…

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