A first-year accounting student provided the following answer to an examination question on the conceptual framework: 

Required

Assume you are the teacher marking this answer.

(a) For each of the points made by the student in their answer, identify which are correct and which are incorrect. Justify your assessment of their work by referring to the Conceptual Framework to support your discussion.

(b) Provide the student with a model or correct answer to the question to assist their learning.

Transcribed Image Text:

WHAT IS THE CONCEPTUAL FRAMEWORK (15 MARKS) The Conceptual Framework looks like a window that you can see the world through and has four sections. It talks about accounting concepts. It talks about what accounting is about. It tells accountants how to prepare financial statements. It is helpful to standard setters. The four parts are: (a) the accounting entity, which states that the transactions of the owners should be separate from that of the business (b) the objective of businesses, which states the objective of a business is to make profit to be able to pay dividends to the owners (c) the qualitative characteristics, which include the monetary principle, the accounting period concept and the going concern and cost principles (d) the definition of elements in the financial statements, which is the last window. For example, accounts receivable is defined as 'the right to receive cash upon the sale of goods or provision of services to a customer'.