The following image represents a conceptual framework which is the basis of accounting in IFRS. Demand Supply Userst investors, lenders, and other creditors Constraints Cost (vs. benefit) Objective: to provide information useful for investment and lending decisions Measurement Historical cost Current cost Realizable value Present value Recognition . Probable and measurable future flows of resources Revenue recognition Elements of financial statements Assets Liabilities Equities Income -revenue -gains Expenses -ordinary expenses -losses Fundamental qualitative characteristics Relevance Representational faithfulness Enhancing qualitative characteristics Understandability Comparability Verifiability Timeliness . Assumptions Going concern Financial capital maintenance Required: In your own words discuss the following: 1. Why do we, as accountant, need the conceptual framework? What is the purpose of it? What are we trying to achieve by creating it? How does it help us serve our purpose? (2 marks) 2. Explain the demand side of the framework and its components. (10 marks) 3. Explain the supply side of the framework and its components. Ensure to discuss each area constrains, principles and assumptions. (18 marks) DO: Use your own words. The goal of this question is to give you the opportunity to show your understanding of the framework and its components. Use examples when it helps you explain your understanding, Explain how the various components of the framework connect with each other