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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Which of the following is considered a constraint on useful information by Statement of Financial Accounting Concepts No. 8?

  1. a. benefits > costs
  2. b. conservatism
  3. c. timeliness
  4. d. verifiability

To determine

Identify the option that is considered to be constraint on useful information by Statement of Financial Accounting Concepts No.8

Explanation

Accounting Information:

Accounting information helps in measuring and communicating economic events in business. Accounting concepts and accounting information guides the enterprise in managing the business activities and helps in monitoring the method of invest the money and receiving money.

Justification for incorrect answer:

Option b:

Conservatism is an accounting assumption, it is as an approach used by the accountants to avoid the overstating of net assets and net income when the amounts are uncertain. Therefore, Option b is an incorrect answer.

Option c and d:

Timeliness and verifiability are one of the characteristics of the accounting information that helps in enhancing the decision useful of information that is relevant and faithful...

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