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CONCEPTUAL FRAMEWORK information in the preparation and presentation

of statements.
Assumptions and Financial Reporting
Basic Purposes of the Conceptual Framework
Accounting Assumptions or Accounting Postulates a. To assist the FRSC in developing accounting
standards that represent PH GAAP
 The basic notions or fundamental premises on
b. To assist preparers of financial statements in
which the accounting process is based.
 Served as a foundation in order to avoid applying accounting standards and in dealing
misunderstandings but rather enhance the with issues not yet covered by GAAP
understanding and usefulness of the financial c. To assist the FRSC in its review and adoption of
statements. IAS
d. To assist users of financial statements in
Underlying Accounting Assumptions interpreting the information contained in the
1. Going Concern financial statement
2. Accounting Entity e. To assist auditors in forming an opinion as to
3. Time Period whether financial statements conform with PH
4. Monetary Unit GAAP
Going Concern f. To provide information to those interested in the
work of FRSC in the formulation of PFRS
 The accounting entity is viewed as continuing in Scope of
operation indefinitely in the absence of evidence
to contrary.
 Also known as Continuity Assumption
Accounting Entity Assumption
 The entity is separated from the owners,
managers, and employees
 Transaction of entity should not be merged with
transactions of the owners
 To have fair presentation of financial statements
Time Period Assumption
 the concept that a business should report the
financial results of its activities over a standard
time period, which is usually monthly, quarterly,
or annually.
Monetary Unit Assumption
 The monetary unit principle states that you only
record business transactions that can be
expressed in terms of a currency.
 also assumes that the value of the unit of
currency in which you record transactions
remains relatively stable over time.
Conceptual Framework for Financial Reporting
 A complete, comprehensive, and single
document promulgated by the IASB
 Summary of the terms and concepts that
underlie the preparation and presentation of
financial statements
 An attempt to provide an overall theoretical
foundation for accounting which will guide
standard setters, preparers, users of financial