FASB Conceptual Framework: Violations of Reliability

Violations of Reliability

Prev Question Next Question

Question

According to the FASB conceptual framework, which of the following situations violates the concept of reliability?

Answers

A. Financial statements include property with a carrying amount increased to management's estimate of market value.

B. None of these answers.

C. Financial statements are issued 9 months late.

D. Data on segments having the same expected risks and growth rates are reported to analysts estimating future profits.

E. Management reports to stockholders regularly refer to new projects undertaken, but that financial statements never report project results.

Show Answer

Explanations

Click on the arrows to vote for the correct answer

A. B. C. D. E.

Reliability has 3 primary qualities: verifiability, neutrality and representational faithfulness. Neutrality is violated here as information should not be prepared or reported to obtain a predetermined result, and should be free from bias.

Prev Question Next Question