Reference no: EM13332442

Part -1:

Requirements:

(a) What is a conceptual framework in accounting? How can the conceptual framework help users and preparers understand accounting requirements and financial statements?

(b) Why is accounting said to be political in nature? How can a conceptual framework help in the setting of accounting standards?

(c) Which stakeholders within society are likely to benefit from the development of a conceptual framework of accounting?

(d) What advantages/benefits have been put forward by standard setters to support the development of a conceptual framework in accounting? Do you think such benefits will be achieved in practice?

(e) Hines (1991)* argues that conceptual frameworks ‘presume, legitimise and reproduce the assumption of an objective world and as such they play a part in constituting the social world ... conceptual frameworks provide social legitimacy to the accounting profession'. Explain what Hines means.

(f) In 400 words or less, describe and summarise the current state in the development of a conceptual framework in accounting in Australia and internationally.

Part -2:

Requirements:

(a) Income smoothing and ‘big bath accounting' are two methods accountants/managers use in earnings management. Explain how these methods work, discuss the motivations in doing so and the circumstances in which management would consider in engaging in these practices.

(b) Why might managers choose accounting methods to increase current period earnings? Explain with relevant concepts and principles using one example.

(c) Why might managers choose accounting methods that reduce current period earnings? Explain with relevant concepts and principles using one example.