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According to the FASB conceptual framework, which of the following situations violates the concept of reliability?
Suggested Answer: B
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Choice 'b' is correct. $120,000 expense included in the determination of net income or loss for the sixmonth interim period ended June 30, 1991.
34 comments · newest first
AL
Alona
11 months ago
I disagree with D. Inflating values can mislead investors.
CA
Carla
11 months ago
A is fine, same risks and growth rates mean reliable comparisons.
LU
Luke
11 months ago
Wait, isn't it normal for estimates to change? D seems a bit sketchy though.
AN
Anisha
11 months ago
I think C is more concerning. If results aren't reported, how can we trust the info?
AS
Asuncion
12 months ago
B is definitely a reliability issue. Late statements are a big no-no.
DO
Dorethea
12 months ago
I’m leaning towards C because if the financial statements don’t match what management is saying, that could definitely undermine reliability.
FR
Francine
12 months ago
I feel like I've seen a similar question where the focus was on timely reporting, so B seems like a strong candidate.
SC
Scarlet
1 year ago
I'm not entirely sure, but I remember something about management estimates in option D possibly impacting reliability too.
RA
Ranee
1 year ago
I think option B might be the answer since issuing financial statements late can affect their reliability.
LI
Lina
1 year ago
Hmm, I'm a bit unsure about this one. I'll need to review the concepts of revaluation and how the accounting entries should be recorded.
AU
Audria
1 year ago
Hmm, I'm not sure about COMMIT. Is that a DML command? I'll have to double-check the definitions to be sure.
LO
Lorrine
1 year ago
Okay, I see the diagram. I think I can figure this out, but I'll need to double-check my work to make sure I get the right answer.
MA
Matt
1 year ago
Hmm, this looks like a tricky one. I'll need to carefully review the message sending rules to identify the variables in the Basic Message Information.
BA
Barabara
1 year ago
Option B is a close contender, but nine-month-old financial statements are still more reliable than property values based on management's crystal ball. I'd go with D on this one.
CR
Crissy
1 year ago
Wow, these options are like a minefield of unreliable financial reporting practices. I'm glad I don't have to deal with that in my day-to-day life. *cough* Enron *cough*
KA
Kanisha
1 year ago
C) Management reports to stockholders regularly refer to new projects undertaken, but the financial statements never report project results.
VE
Venita
1 year ago
B) Financial statements are issued nine months late.
SK
Skye
1 year ago
A) Data on segments having the same expected risks and growth rates are reported to analysts estimating future profits.
JA
Jaclyn
1 year ago
C) Management reports to stockholders regularly refer to new projects undertaken, but the financial statements never report project results.
LU
Luther
1 year ago
B) Financial statements are issued nine months late.
HU
Huey
1 year ago
A) Data on segments having the same expected risks and growth rates are reported to analysts estimating future profits.
AN
Anthony
1 year ago
I agree, option D is the right answer. Adjusting asset values to management's estimates is subjective and lacks verifiability, which is a key component of reliability.
LE
Leonora
1 year ago
Agreed. Reliability is one of the fundamental qualities that financial information should possess to be useful for decision-making.
MI
Michell
1 year ago
I see your point. It's crucial for financial information to be consistent and reliable for users to make informed decisions.
LI
Linwood
1 year ago
I think option C also violates reliability. If management reports on projects but the financial statements don't, that could be misleading.
YV
Yvette
1 year ago
Option D is definitely the answer. It's important for financial statements to be based on objective and verifiable information.
MA
Martha
1 year ago
I agree with all of you. Option A is the only one that does not violate the concept of reliability.
TO
Tomoko
1 year ago
I see your point. Option B is also a violation because issuing financial statements late affects their reliability.
TO
Toi
1 year ago
I think option C is also a violation of reliability. Reporting on new projects without showing the results is misleading.
LA
Layla
1 year ago
Option D is definitely the correct answer. It goes against the concept of reliability.
LA
Lai
1 year ago
Option D seems to be the correct answer. Reporting property at a market value estimate rather than historical cost violates the reliability concept of the FASB framework.
TA
Tayna
1 year ago
But what about option D? Including property at an inflated value could also compromise the reliability of the financial statements.
CL
Clorinda
1 year ago
I agree with Asha. Late financial statements can lead to doubts about the accuracy and completeness of the information provided.
AS
Asha
2 years ago
I think option B violates the concept of reliability because financial statements should be issued in a timely manner.