Accounting Concept

Compare and contrast the accounting conceptual framework and accounting regulatory framework in UK

Accounting is a process of recording the financial transaction in day to day business activities in accordance with generally accepted principal and other regulatory requirement (Oxford dictionary). Accounting is not exact science but it is subjective so there is a need for development of accounting conceptual and regulatory framework. So as to bring parity for the user of the financial statement. Accounting concept and principal have been derived to present financial statement in standard format. There for accounting concepts like going concern, accrual, consistency etc. derived. Sometimes information in financial statement may be misleading to its user. Accountant should follow the method of accounting that should be consistence with accounting principal and concept. Regulatory accounting framework related to rules and regulation that facilitate the preparation of financial statement in accordance with generally accepted accounting principal. In UK regulatory framework for accounting know as generally accepted accounting principal (UK GAAP) (Alan Melville, 2011). Regulatory framework ensures that financial statements are prepared with same set of rules to provide quality information to external user. Main sources for the regulatory framework are legislation in UK it is company law 2006. Second accounting standards in UK it is developed by accounting standards board (ASB). Third one is stock exchange known as London stock exchange which is regulated by the financial services authority. Normally regulatory framework is applicable to the large entity where there is agency relationship exist means company is owned and managed by different people. In case of small company where ownership and management is in the same hand there is little applicability of regulatory framework. Main purpose of Regulatory framework is to compel to follow accounting concept in various...