CPA Financial Accounting and Reporting (FAR) › Conceptual Framework
The objectives of financial reporting, as set forth by the FASB conceptual framework, are based on which of the following?
Materiality
SEC reporting requirements
Generally accepted accounting principles
The needs of financial statement users
FASB basis its objectives for financial reporting on the needs of the ultimate financial statement user.
Which of the following is true about both timeliness and understandability according to the FASB conceptual framework?
Both are enhancing qualitative characteristics of useful financial information
Both are fundamental qualitative characteristics of useful financial information
Both are characteristics of relevance
Both are characteristics of faithful representation
Enhancing qualitative characteristics of financial reporting include timeliness, understandability, comparability, and verifiability.
How should the nondeductible portion of meals and entertainment expenses be reported in the financial statements on the income tax basis?
Excluded completely from the financial statements
Included in the expense category in the determination of income
Separately stated from determining income
Excluded from determining income but included in retained earnings
Using the income tax basis, nondeductible expenses should be included in the expense category in determining income.
According to the FASB conceptual framework, revenue results from which of the following?
A decrease in an asset from primary operations
A decrease in a liability from primary operations
An increase in a liability from ancillary transactions
An increase in an asset from ancillary transactions
Revenue results from an overall reduction in liabilities, while expenses result from an overall increase in liabilities.