Definition Of Conceptual Framework Accounting Essay

No. For not-for-profit organisation, they get the excess but nor net income. Surplus is an sum which gross more than outgo. Not-for-profit organisation has a excess to do them less emphasis and equips the organisation to bear the activities to hit its mark. The activities which the organisation trade must associate with its mission, if non, the excess which addition from that activities consider as unrelated concern income. All the excess must invested to the organisation, can non travel in the pockets of board member or staff.

There are many ways that not-for-profit organisation to get fund. The non-for-profit organisation raises money through ranks fees. For illustration, a individual who wants to fall in a nine, he must paid an sum each twelvemonth, so that, he can utilize all the installations in that nine. The ranks a fee is cod one time a twelvemonth. They collect this money to cover the outgo of the organisation. So, when the money which collect from the members more than the outgo, it is a excess, and the excess will reassign to the accumulated fund history. In the other manus, the not-for-profit organisation besides gets the excess from an activity. For illustration, a athletics nine held competition, it must roll up the enrollment fee to bear the disbursals of the competition. When there has a balance of money, it will be reassign to that twelvemonth grosss and payment history and see as the gross of the twelvemonth. This money is used to bear the outgo of the nine, such as printing and letter paper, rewards of aid and so on.

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The not-for-profit organisation besides funded from foreigners, such as the populace, companies and other. Funded from foreigners is the chief portion that to keep the organisation. The money received from foreigners will enter at the grosss account. Some of the organisation non merely received money, but besides received thing which can donate to needy. Some of the not-for-profit organisation gets help from authorities. That is authorities assistance. General Hospital is one of the organisation which fund from authorities. The General Hospital merely collect a little sum money from patient who went for dainty. The sum they collect is to cover some of theirs outgo. They are non traveling to derive net income, but they are to assist the needy. The not-for-profit organisation is qualified as tax-free as the organisation do non derive net income.

Definition of Conceptual Framework is a coherent system which is inter-related and basicss must take to consistent criterions intentionally to do certain the nature, map and bounds of fiscal accounting and fiscal statements. There are some grounds why conceptual Model are provided. Conceptual model is program to move as a ordinance for puting an accounting criterions. Besides, it can besides move as a foundation for accounting criterions to take in deciding accounting differences. Conceptual model is besides a cardinal rules to do certain there is no any repeated in accounting statements. Conceptual Framework can make efficiencies and better communicating. With Conceptual Framework, we can upgrade accounting criterions to a higher degree. We no demand do everything from an beginning when we want measure an new accounting issue.

Besides that, harmonisation by supplying a footing for choosing the most suited accounting intervention permitted by the fiscal accounting criterions are promoted by the conceptual model. The conceptual model is besides one of the usher for companies ‘ development of future fiscal accounting criterions. The conceptual model normally deals with events, conditions or minutess. Some fortunes, minutess, events or conditions in Financial accounting criterions which is developed by Accounting and Auditing Organisation for Islamic Financial Institutions ( AAOIFI ) can assist by the Conceptual Framework.

Furthermore, to do certain the contents in fiscal statements prepared is consistent with fiscal accounting criterions, the users of fiscal studies in explicating the information contained by utilizing the conceptual model. The Conceptual Framework is non merely map in our ain state but besides helps national criterion puting organic structures in developing national accounting criterions.

Based on accounting criterions. For the development of rules, the conceptual model plays an of import portion. Management when fixing fiscal statements and other fiscal studies by utilizing the Conceptual Framework as a usher of subjective opinion. The information in the work of Accounting and Auditing Organisation for Islamic Financial Institutions ( AAOIFI ) can be provided by the Conceptual Framework.

The Conceptual Framework helps Accounting Standards puting are to analyse accounting issues, the conceptual model is more prompt by offering a common set of footings and premises. Lack of a conceptual model might distribute of ‘rules-based ‘ accounting systems. The development of a conceptual model can take IASB and FASB to make things much more smoothly and absolutely.

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‘Bookkeeping ‘ agencies entering of all the fiscal minutess that are taking topographic point in a company. Bookkeeping is normally recorded by bookkeeper. Before development of clerking, alternatively of utilizing our modern twenty-four hours general leger, items were used in 4000 B.C. . This is truly made bookkeeper felt emphasis. Bookkeeping is recorded by composing and entering debit and recognition entries into diary and so on. Some mistake would happen in bookkeeping advancement and this is a common mistake. It was realistic because of the manual computations. Once test balance was non in balance, bookkeeper had to travel back to look into every parts see whether which portion occur mistake. If the test balance was corrected, bookkeeper would direct to comptrollers to fix seting entries followed by fiscal statements.

Well, Today, the occupation of bookkeeper is much more lighter and easier. As the clip base on balls by, many companies started to alter the place of bookkeeper because they think that a usual office male child can take over this occupation. The manual of journalizing and poster is replaced by computing machine package. Computer package helps to work out jobs in accounting such as they can look into the test balance or which portion mistake occur through history computing machine package. Besides that, single client ‘s record can updated straight such as debts, cost of goods sold and so on. Debits and credits are equal in sum and miscalcute balance or clerical mistakes are acquiring lesser and lesser.

Single Entry is defined as an accounting ways in which minutess are recorded as a individual entry. Single entry are normally no separate columns for debits and credits, full of positive and negative Numberss and so on. Single entry accounting largely used by little companies with simple fiscal statements. For individual entry system, personal histories are recorded maintain into a hard currency book and books by and large. Companies rarely use individual entry because there might be some minutess are non recorded and some others minutess merely recorded partly. This may do test balance are non accurate at all. Furthermore, comptrollers can non fix an accurate net income or loss to companies as an accurate fiscal study. Companies can non find their companies are gaining net income or agony in loss. Individual entry makes a batch of errors and the hazard of fraud is more higher so this system can be determined as a non perfect system.

Today, most of the companies choose to utilize dual entry system. Double entry system is much more better than individual entry and wholly different from individual entry system. Double entry system is utilizing two columns to enter debits and credits. No more positive and negative Numberss in the books as each dealing can enter in two different topographic points which is debit side and recognition side so that you can do certain everything is recorded and balance. Double entry system records two fold facets of every minutess and test balance can be drawn up more accurately. Net income or loss can be prepare accurately due to a systematic method of entering. Companies can easy cognize whether their companies gain net income or endure in loss so that they can put their ends for future. The hazard of fraud and errors can be cut down through dual entry system. For illustration, a labor had been signed to hold a occupation in a building site. The company will pay her after her public presentation. In dual entry accounting, Account Receivable should enter as a debit assigned and a recognition to Revenue history with the same sum. This is the dual entry system which is less errors in every minutess. Development of clerking and the dual entry has improved human existences and made things go much more easy.

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There is one advantage for utilizing accounting standard relate the remittal of understanding the fiscal statement. FASB has been published the accounting criterions for standing for some point of position that the necessary procedures for the concern to follow. The users of fiscal statement expect corporations to follow the accounting criterions by the published while making fiscal statement. The accounting criterions were relied on the premises set Forth into by these users when the consequences reported. Therefore, fiscal statements of different companies utilizing the same premises were interpreted by the users. Once the users understand there premises so that they may utilize this cognition when reading any fiscal statement.


Furthermore, there is another advantage of utilizing accounting criterions following the counsel of supplying to comptrollers. Then, when the fiscal coverage jobs occur, the comptroller may confer with to the published accounting criterion to specify the event how to enter. The issues include new accounting criterions minutess come out from engineering, for illustration: Internet gross revenues or intelligence operations set by the company, such as alteration in retirement pension. Therefore, the demands of fiscal statements users every bit good as company feedback were incorporated by the FASB when making accounting criterions. So that, this procedure let the comptrollers to swear that the counsel supplying through the accounting criterions passed the allow procedure of guaranting that everyone ‘s demands when they meet it.

Greater Comparability

Therefore, another advantage of utilizing accounting criterions there is the corporations use the history criterions to fix their fiscal statement that can be compared to each other more right. Therefore, it besides an of import while comparing with other companies which located in different states since they may otherwise on utilizing the different regulations and method for the statements. Harmonizing to this addition in comparison, it might assist investor determine and know themselves investing should travel.


Inflexible Model

Of class, in the accounting criterions besides have the disadvantages of utilizing it. In the accounting criterions, it involves the inflexible model, so the comptrollers must follow with, they can non interrupt the accounting criterions regulations even there are inflexible. Then, every company faces different experience because the companies are different, so that the ways they solve are different excessively. Because of the companies have a different ways to work out, so they may hold their ain alone experience, so that the comptroller have to do the company ‘s alone experiences and so suit them into the guidelines of the published accounting criterions.

Cost to follow

In add-on, there is a disadvantage of utilizing accounting criterions when considers the cost for the company to follow with the criterion. Furthermore, the company has to see the demands of the criterion were required by the new accounting criterions and what about the company must take to transport out the actions for the criterion and what is the cost will be excessively. There are a batch of instances occur, so that the company have to plan some new processs and which is required to has a big fiscal investing that are including the employees labour and, system ascents and employee trading and so on.

Not Globally Accepted

Another disadvantage there is the history criterion has non yet adopted by some other states to keep it every bit good. This factor makes the companies that do concern are required to utilize fiscal IFRS and utilizing another set by Generally Accepted Accounting Principle.

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The historical cost is the consideration that given to get plus such as hard currency or its hard currency equivalent paid or received or the just value. When the liability was incurred or hard currency or hard currency equivalent expected to be paid, it can be refer to the liability in historical cost.

There are some virtue and defects of the historical cost accounting construct. First, the virtue of historical cost accounting can be figure as historical cost is relevant for doing economic determination. The rating and choice of determination regulations are affected by the historical cost. It was presented by Ijiri ( 1975 ) about the ground why historical cost is relevant for determination devising. Some of import information is needed about the quality of the past determinations such s a prognosis of future monetary values must be made, and past monetary values serve as basic. Historical cost is an of import input for those inquiry like how much has already been earned instead than how much more they could gain. It could n’t be denied that a context such as nonexempt income and cost-plus contracts is the fact that historical cost is employed and imposed by determination shaper by his environment.

Second, historical cost is besides less capable to use. Actual, non simply, minutess are a historical cost based on and it ‘s besides the acquisition monetary value of an assets. Accountants or directors are to be informed to enter all the assets and liabilities at their acquisition monetary value. By this manner, the assets are measured and reported objectively and verifiable basically. Therefore, the hazard of use of sums by the director can minimise.

Third, historical cost is functional as control intent. In a general accounting, aim of accounting ca n’t be destruct that it is seen as affecting significantly in the direction map. An n histories is given to the equity holders by the director. The income statement contributes the grounds to trap down how efficaciously direction has done its duty. For answerability, entering about the past minutess are necessary.

In other manus, there are some defects of the historical cost accounting construct. First, historical cost is non related for the determination devising. Historical cost is practicableness and non plenty for the reading of concern determinations. The history of accounting unwrap to the users about the primary function of accounting to run into the demands of accounting information. Besides the interesting in direction map of the accounting information, as represented by the net assets of the company, users besides interested in the increasing and decreasing of the value of their investing.

In add-on, historical cost accounting is misdirecting in some information. The figures of conventional accounting were misleading those investors and creditors to portion with their money. The transaction-oriented by the comptrollers in look intoing paperss for historic cost were more interesting than the current physical world and rating of the entity. Therefore, the application of the historical cost construct can be deceptive, this give a significance that the quality of justness can non vouch and honesty to the information it carries.


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