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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. The need for conservatism.
B. The needs of the users of the information.
C. Generally accepted accounting principles.
D. Reporting on management's stewardship.
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.
Choice "a" is incorrect. Conservatism is an underlying concept for financial accounting but is not the basis
for the objectives. SFAC 2 para. 91-97 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. Generally accepted accounting principles (GAAP) are derived from and
based on the objectives of financial reporting, not the other way around.