Abstract
The FASB and IASB are reexamining and revising their existing conceptual frameworks. A conceptual framework consists of (1) objectives and (2) concepts that follow logically from those objectives. Most attention is being paid to the concepts, seemingly accepting the objective of wealth measurement. This paper suggests reconsideration of wealth measurement as the objective. Christensen and Demski (2003) suggest two views of accounting objectives: (1) the “value school” based on wealth measurement and (2) the “information content school” based on measuring and disclosing informative events. They make a case for the latter as the most logical objective of accounting. If one accepts the information-content approach to accounting, quite different concepts may arise. For example, the FASB and IASB are on record favoring the balance sheet approach over the revenue and expense approach. This is logical if wealth measurement is an appropriate objective. However, under the information content approach, the revenue/ expense approach, essentially focusing on the flows, which more directly reflect the events affecting an entity, may more logically follow. The revenue/expense approach seems to better align with the disclosure of information events and states.
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Sundem, G.L. (2007). A Note on the Information Perspective and the Conceptual Framework. In: Antle, R., Gjesdal, F., Liang, P.J. (eds) Essays in Accounting Theory in Honour of Joel S. Demski. Springer, New York, NY. https://doi.org/10.1007/978-0-387-30399-4_13
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