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NEW QUESTION: 1
According to the FASB conceptual framework, the objectives of financial reporting for business
enterprises are based on:
A. Generally accepted accounting principles.
B. The needs of the users of the information.
C. Reporting on management's stewardship.
D. The need for conservatism.
Choice "d" is correct. The FASB conceptual framework states that the objectives of financial reporting
stem from the informational needs of the external users of the information. SFAC 1 para. 28 Choice "a" is
incorrect. Generally accepted accounting principles (GAAP) are derived from and based on the objectives
of financial reporting, not the other way around. Choice "b" is incorrect. Information concerning
management's stewardship is only one aspect of the information financial statements are intended to
provide. SFAC 1 para. 50 Choice "c" is incorrect. Conservatism is an underlying concept for financial
accounting but is not the basis for the objectives. SFAC 2 para. 91-97