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Financial Accounting Standards Board has defined the conceptual framework as –
‘A coherent system of interrelated objectives and fundamentals that is expected to lead to consistent standards and that prescribes the nature, function and limits of financial accounting and reporting.’
The conceptual framework describes the objective of, and the concepts for, general purpose financial reporting. It is a tool that –
The objective of the Conceptual Framework is to improve financial reporting by providing a much more holistic, complete, clear and updated set of concepts.
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