Small business modelling within the financial accounting conceptual framework

Abstract

This study investigates the potential of structuring the Accounting Conceptual Framework, that is outlined in the CICA (Canadian Institute of Chartered Accountants) Handbook, within a continuous feedback simulation model in effort to study the behavioural aspects of the small business environment. The study uses pre-defined relationships established in the framework to bind together parameters of importance. This provides a different dimension on an old concept that previously sought to define relationship through implied influences. Based on this new concept, the pre-definition establishes the relationship between parameters, the program links them, and the user defines the strength. How much do we invest in the business? What price should the product be sold at? Much would be the same in a real small business. The result from the simulations of different business conditions provided much insight into the different aspects of operations. The type of information garnered was able to point to specific weaknesses, strengths, and possible strategies which would useful in making more effective business decisions. The research may assist many small business owners who wish to better understanding their specific business environment, positive or negative.