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QUESTION 1

The Conceptual Framework (IASB 2011) sets out the concepts that underlie the preparation and presentation of financial statements. It provides guidance on the fundamentals of accounting. REQUIRED:

(a) Describe in detail the general purpose of financial reports.

(b) Discuss the debate relating to whether financial statements achieve the objective of financial statements given in the Conceptual Framework.

(c) The general rule laid down in the Conceptual Framework is that 'the benefits derived

from information should exceed the cost of provkling that Information'. Discuss.

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