(a). (i) Conceptual framework is a constitution, a coherent system of interrelated objectives and fundamentals that can lead to consistent standards and prescribes the nature, functions and limits of financial accounting and financial statements.

(ii) It enables certain critical issues to be addressed.

(iii) It also facilitates the development of accounting standards and Generally Accepted Accounting Practice (GAAP) in accordance with the principles and underlying assumptions of the concepts.

(iv) It also promotes consistency in the application of accounting principles and policies. Without conceptual framework there will not be a common definition of the elements of financial statements (asset, liabilities, income and expenses). For example, in line with the framework for preparation and presentation of financial statements gives a precise definition of assets and liabilities and no expenditure on these could be recognized unless such expenditure meets the definition of the framework.

(b). Assets
An asset is a present economic resource controlled by the entity as a result of past events.
An economic resource is a right that has the potential to produce economic benefits.

Liabilities
A liability is a present obligation of the entity to transfer an economic resource as a result of past events.

(c). (i) Substance over form
Substance over form refers to the impact which a transaction or event has on the reporting entity, and this determines the accounting event treatment. Substance over form indicates that transactions and events should be reported in the financial statement in accordance with their economic reality or their commercial intent. For example, a redeemable preference share has the legal status of a share, however its substance is that of a debt instrument.

(ii) Materiality
An item is considered material if its inclusion, omission or misstatement will have a fundamental effect in the financial statements as a whole and affect the economic decision of the user. The requirement of the framework is that items which are material in nature to an entity should be accorded separate recognition, presentation and disclosure, while those that are immaterial (small and separate unimportant) should be aggregated or added up.

(iii) Comparability
This implies that the financial statements of a given year should have relative figure of the past period or periods. This helps to evaluate the performance of the entity and trend analysis over time. It also helps to assess the comparability on consistent application of accounting policies over time.

(iv) Going concern
The going concern concept assumes that the entity will be in operational existence in the foreseeable future time, and that it has no intention to scale down its operation significantly. Except otherwise stated, financial statements are usually prepared on the going concern concept.
If, however, the entity can no longer continue as a going concern, then, subsequent financial statement should be prepared on a breakup basis that is, the assets should be stated at fair value less cost to point of sales (net realizable value) rather than at cost less accumulated depreciation.

(d). (i) Lenders
The lenders are concerned with the ability of the company to pay the finance cost on the borrowed fund and pay the loan when due. They are also interested in the availability of assets to secure loans.

(ii) Suppliers
The suppliers are interested in information that indicates that their debts can be paid by the entity and that the entity will continue as a going concern in order to ensure continued patronage.

(iii) Customers
The customers are interested in information relating to the entity’s continued existence, especially for those that depend on the entity to meet their daily needs.

(iv) Employees
The employees are concerned with their job security and the company’s ability to be profitable, in order to guarantee the payment of their salaries in the future.

(v) Government and their agencies
Government and their agencies are interested in information relating to taxes, regulations, resource allocation and evaluation of government policies on businesses.