Question

JICES Exercise 2-1 The conceptual framework has been created to make accounting information useful Indicate whether the following statements about the conceptual framework are true or false (a) Accounting standards that rely on a body of concepts will result in useful and consistent pronouncements () General purpose financial reports are most useful to company insiders in making strategic business decisions. (c) Accounting standards based on individual conceptual frameworks wil generally result in consistent and comparable accounting reports. (d) Capital providers are the only users who benefit from general purpose financial reporting (e) Accounting reports should be developed so that users without knowledge of economics and business can become informed about the financial results of a company

Answer 1

QUESTION - 1 : CORRECT STATEMENT REGARDING CONCEPTUAL FRAMEWORK [ TRUE / FALSE ]

ANSWER :

[A] Accounting standards that rely on a body of concepts will result in useful and consistent pronouncements - TRUE

[B] General purpose financial reports are most useful to the company insiders in making strategic company decisions. - FALSE

It is useful to the users who lack the ability to ask/demand for the financial informations of an company, so that they have to rely on such reports/accounts for the informations. There are numerous readers for the general purpose financial reports. When the report is in the hands of shareholders /investors they will read it know the financial soundness of company, and to determine whether the investments made in company was wise investments or not. When it reach to public, they will look in to how the business is spending it's money internally and their revnue.

[C] Accounting standards that based on individual conceptuanal framework will generally result in consistent and comparable accounting reports. - FALSE

A soundly developed conceptual framework helps FASB to to issue more useful and consistent pronouncements over time.

[D] Capital providers are the only users who benefit from general purpose financial reporting - FALSE

General purpose reports have several readers, and thus it have several uses. It is both beneficial /useful to the shareholders & investors of company and also the general public . Capital providers can use such reports to ensure the financial soundness of company, public can make use of such reports to know the use of money for the internal activities of business and the revenue from their products and services.

[E] Accounting reports should be developed, so that users without knowledge of economic and business can become informed about the financial results of a company. - TRUE