Question

FASB Conceptual Framework Concepts Statement #8 Practice. What framework concept works best?

1. Mary uses a March sales report to ponder what the April sales will be. However, a change was made in how sales data is collected from the March period.

Answer 1

Financial Accounting Standard Board (FASB) is established for developing and implementing the accounting principles and methods for preparation and presentation of financial statements. Even, Generally Accepted Accounted Principles are also developed by FASB for developing reporting standards and to ensure the public interest by proper reporting principles and procedures.

FASB has also issued Conceptual Framework with a view to framing the objectives of proper financial reporting, elements of financial statements, valuation principles etc. for preparation and presentation of financial statements.

However, the management generally involves in projections while preparing budgets based on historical data and for proper projection historical data is properly evaluated. Therefore, all the external and internal factors due to which sales may be affected in last month or year must considered for better projection. After identifying the internal and external factors, adjust all the effects of one time transaction or any extraordinary item to find the accurate value based on previous records.