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  • Written by Muhammad Ejaz
  • 24 Jul
FREE ACCA P7 BPP TEXT BOOK 2016-2017

FREE ACCA P7 BPP TEXT BOOK 2016-2017 - EXAM PREPARATION & TUTORING

FREE ACCA P7 BPP TEXT BOOK 2016-2017 - EXAM PREPARATION & TUTORINGFREE ACCA P7 BPP TEXT BOOK 2018-2019 - EXAM PREPARATION & TUTORING

1.2 Advantages and disadvantages of a conceptual framework

Advantages

(a) The situation is avoided whereby standards are developed on a patchwork basis, where a particular

accounting problem is recognized as having emerged, and resources were then channeled into

standardizing accounting practice in that area, without regard to whether that particular issue was

necessarily the most important issue remaining at that time without standardization.

 (b) As stated above, the development of certain standards (particularly national standards) have been

subject to considerable political interference from interested parties. Where there is a conflict of

interest between user groups on which policies to choose, policies deriving from a conceptual

framework will be less open to criticism that the standard-setter buckled to external pressure.

(c) Some standards may concentrate on profit or loss whereas some may concentrate on the

valuation of net assets (statement of financial position).

Disadvantages

(a) Financial statements are intended for a variety of users, and it is not certain that a single

conceptual framework can be devised which will suit all users.

(b) Given the diversity of user requirements, there may be a need for a variety of accounting standards,

each produced for a different purpose (and with different concepts as a basis).

(c) It is not clear that a conceptual framework makes the task of preparing and then implementing

standards any easier than without a framework.

Before we look at the IASB's attempt to produce a conceptual framework, we need to consider another

term of importance to this debate: generally accepted accounting practice; or GAAP.

1.3 Generally Accepted Accounting Practice (GAAP)

GAAP signifies all the rules, from whatever source, which govern accounting.

In individual countries, this is seen primarily as a combination of:

 National company law

 National accounting standards

 Local stock exchange requirements

Although those sources are the basis for the GAAP of individual countries, the concept also includes the

effects of non-mandatory sources such as:

 International accounting standards

 Statutory requirements in other countries In many countries, like the UK, GAAP does not have any statutory or regulatory authority or definition,

unlike other countries, such as the US. The term is mentioned rarely in legislation, and only then in fairly

limited terms.

There are different views of GAAP in different countries. The UK position can be explained in the following

extracts from UK GAAP (Davies, Paterson & Wilson, Ernst & Young, 5th edition).

'Our view is that GAAP is a dynamic concept which requires constant review, adaptation and

reaction to changing circumstances. We believe that use of the term 'principle' gives GAAP an

unjustified and inappropriate degree of permanence. GAAP changes in response to changing

business and economic needs and developments. As circumstances alter, accounting practices are

modified or developed accordingly … We believe that GAAP goes far beyond mere rules and

principles, and encompasses contemporary permissible accounting practice.

It is often argued that the term 'generally accepted' implies that there must exist a high degree of

practical application of a particular accounting practice. However, this interpretation raises certain

practical difficulties. For example, what about new areas of accounting which have not, as yet, been

generally applied? What about different accounting treatments for similar items – are they all

generally accepted?

'It is our view that 'generally accepted' does not mean 'generally adopted or used'. We believe that,

in the UK context, GAAP refers to accounting practices which are regarded as permissible by the

accounting profession. The extent to which a particular practice has been adopted is, in our

opinion, not the overriding consideration. Any accounting practice which is legitimate in the

circumstances under which it has been applied should be regarded as GAAP. The decision as to

whether or not a particular practice is permissible or legitimate would depend on one or more of

the following factors:

 Is the practice addressed either in the accounting standards, statute or other official?

pronouncements?

 If the practice is not addressed in UK exam preparation & tutoring accounting standards, is it dealt with in International

Accounting Standards, or the standards of other countries such as the US?

 Is the practice consistent with the needs of users and the objectives of financial reporting?

 Does the practice have authoritative support in the accounting literature?

 Is the practice being applied by other companies in similar situations?

 Is the practice consistent with free acca study materails the fundamental concept of 'true and fair’?’?

This view is not held in all countries, however. In the US particularly, generally accepted accounting

principles are defined as those principles which have 'substantial authoritative support'. Therefore

accounts prepared in accordance with accounting principles for which there is not substantial authoritative

support is presumed to be misleading or inaccurate.

The effect here is that 'new' or 'different'free acca books download pdf  accounting principles are not acceptable unless they have been

adopted by the mainstream accounting profession, usually the standard-setting bodies and/or professional

accountancy bodies. This is much more rigid than the UK view expressed above.

A conceptual framework free acca books pdf for financial reporting can be defined as an attempt to codify existing GAAP in

order to reappraise current accounting standards and to produce new standards.

FREE ACCA P7 BPP TEXT BOOK 2018-2019 - EXAM PREPARATION & TUTORING

Finding questions 
Question index .......................... iv
Topic index .............................. vii 
Helping you with your revision ..................................... viii 
Revising P7 
Topics to revise......................... ix
Question practice ...................... ix
Passing the P7 exam.................. x
Exam information ..................... xv
Examinable documents ........... xvi
Analysis of past papers ........... xix
Useful websites ...................... xxi 
Questions and answers 
Questions................................... 3
Answers ................................... 85 
Exam practice 
Mock exam 1
· Questions ..................... 381
· Plan of attack ................ 389
· Answers........................ 390 
Mock exam 2
· Questions ..................... 409
· Plan of attack ................ 417
· Answers........................ 418 
Mock exam 3 (ACCA September/December 2015 Exam)
· Questions ..................... 441
· Plan of attack ................ 451
· Answers........................ 452 
Review form  

 

FREE ACCA P7 BPP TEXT BOOK 2018-2019 - EXAM PREPARATION & TUTORING
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