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AICPA CPA-Financial Exam - Topic 1 Question 123 Discussion

According to the FASB conceptual framework, the objectives of financial reporting for business enterprises are based on:
D) The needs of the users of the information.
A) Generally accepted accounting principles.
B) Reporting on management's stewardship.
C) The need for conservatism.

AICPA CPA-Financial Exam - Topic 1 Question 123 Discussion

Actual exam question for AICPA's CPA-Financial exam
Question #: 123
Topic #: 1
[All CPA-Financial Questions]

According to the FASB conceptual framework, the objectives of financial reporting for business enterprises are based on:

Show Suggested Answer Hide Answer
Suggested Answer: D

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


by Horace at Apr 02, 2026, 06:47 PM

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Dalene
I think the answer is D. Users need relevant info.
upvoted 0 times
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Mollie
5 days ago
Agreed, D makes the most sense in practice.
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Jodi
10 days ago
Really? I thought it was more about C and the standards.
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Matthew
15 days ago
Wait, are we sure it's not A? Conservatism matters!
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Edda
2 months ago
I think B is also important for transparency.
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Yuette
2 months ago
Definitely D, it's all about the users!
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Izetta
3 months ago
I want to say it's about the needs of users too, but I keep second-guessing myself. Maybe I should have reviewed more on this topic!
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Dianne
3 months ago
I feel like I've seen a question like this before, and it was about the importance of GAAP. But I don't think that's the main focus here.
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Lenna
3 months ago
I remember something about management's stewardship being important, but I can't recall if it was the main objective. Could it be B?
upvoted 0 times
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Boris
3 months ago
I think the answer might be D, since the framework emphasizes the needs of users, right? But I'm not completely sure.
upvoted 0 times
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