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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Which of the following is not a benefit derived from the conceptual framework?

  1. Supports the objective of providing information useful for making business and economic decisions.
  2. Provides a logical structure to aid in the understanding of complex accounting standards.
  3. Provides specific guidance on how transactions should be recorded.
  4. Supports the development of a consistent set of amounting standards.

To determine

Introduction: The conceptual framework of accounting explains the objectives and concepts for reporting financial information. It is formed based on fundamentalobjectives laid down in Generally Accepted Accounting Principles (GAAP). The main reason of having conceptual framework is to help the accountants in providing the reason of having certain practices which forms the basis for economic decision making.

To choose: The option which is not a benefit derived from conceptual framework.

Explanation

Explanation for correct answer-

Option C which is provides specific guidance on how transactions should be recorded. The conceptual framework of accounting does not provide the method to present financial transactions. It helps the accountants inexplaining the reasons for adopting certainaccounting practices. Thus this is not a benefit of conceptual framework of accounting.

Explanation for incorrect answer-

Option A which is supports the objective of providing information useful for making business and economic decisions − This is a benefit of conceptual framework for financial transaction reporting which providestransparency and quality of useful informationto help in making vital business and economic decisions...

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