Question

Question: The issues that the FASB and IASB must address in developing a conceptual framework include all of the following except:

(a) should the characteristic of relevance be traded-off in favor of information that is verifiable?

(b) should a single measurement method such as historical cost be used?

(c) what are the key elements of asset and liability definitions?

(d) should the role of financial reporting focus on internal decision-making as well as providing information to assist users in decision-making?

Short answer

Answer

The correct option is(d)

Step-by-step solution

Definition of Conceptual Framework

Conceptual frameworks can be defined as the fundamentals and the principles that must be followed to achieve the targeted objective of the financial reporting.

Explanation for correct options

Option (d) is the correct option because the conceptual framework does not focus on the role of financial reporting. Instead, it focuses on the quality and elements of the financial reports.

Explanation for incorrect options

1. Option (a) is incorrect because the conceptual frameworks are established to increase the relevancy of the financial reporting of the business entity.
2. Option (b) is incorrect because the conceptual framework focuses on the comparability of the financial statement; therefore, it determines the measurement method used for financial reporting.
3. Option (c) is incorrect because the conceptual framework also defines the elements of the financial statement, such as assets, liabilities, equity, revenue, and expenses. Such definition is used to make classification between the various line items.