Accounting conceptual framework
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How does the conceptual framework fit with the needs of society and business?
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Solution Summary
In a 432 word solution, the response explains the need for a more universally accepted set of standards complete with real world examples demonstrating both the positive and negative possible outcomes without the framework.
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In a market economy such as we have, individuals own and operate the factors of production. It can also be termed a free enterprise system or capitalism. A system of free enterprise rewards owners who have great ideas, good implementation and great products. Probably the best advantage of our system is that innovation is allowed and encouraged.
The measure of success in a capitalistic economy is cash flow and profits. If business entities needed no investors or creditors (bank loans), the standardization of the financial accounting framework would not have been so essential. As companies grow, both investors and creditors are often needed for expansion plans. Without ...
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