Accounting Theory
The financial accounting standards board's conceptual framework project
Experts have debated the exact nature of the basic concepts and related principles composing
accounting theory for years. The debate continues today despite numerous references to generally accepted accounting principles (GAAP). To date, all attempts to present a concise statement of GAAP
have received only limited acceptance.
Due to this limited success, many accountants suggest that the starting point in reaching a concise
statement of GAAP is to seek agreement on the objectives of financial accounting and reporting. The
belief is that if a person (1) carefully studies the environment, (2) knows what objectives are sought, (3)
can identify certain qualitative traits of accounting information, and (4) can define the basic elements
of financial statements, that person can discover the principles and standards leading to the stated
objectives. The FASB completed the first three goals by publishing "Objectives of Financial Reporting
by Business Enterprises" and "Qualitative Characteristics of Accounting Information". Addressing the
fourth goal are concepts statements entitled "Elements of Financial Statements of Business
Enterprises" and "Elements of Financial Statements".