1. Identify the applicable qualitative characteristics referred to in the Conceptual Framework for Financial Reporting that is not adhered in the scenario below and indicate the respective group to which each characteristic belongs to. You are also required to indicate the sub-category (if applicable) to which the qualitative characteristic belong to. Director’s bonuses are based on profits, and they therefore make it their goal to make profits seem as high as possible. They understate expenses by recognising the minimum amount of expenses and they overstate profits by recognising the maximum profits. The information cannot be relied on as the directors select and filter the information to influence decisions. a. Faithful Representation; neutral; Fundamental b. Relevance; Fundamental c. Faithful Representation; free from error; Fundamental d. Faithful Representation; completeness; Fundamental
1. Identify the applicable qualitative characteristics referred to in the Conceptual Framework for Financial Reporting that is not adhered in the scenario below and indicate the respective group to which each characteristic belongs to. You are also required to indicate the sub-category (if applicable) to which the qualitative characteristic belong to. Director’s bonuses are based on profits, and they therefore make it their goal to make profits seem as high as possible. They understate expenses by recognising the minimum amount of expenses and they overstate profits by recognising the maximum profits. The information cannot be relied on as the directors select and filter the information to influence decisions. a. Faithful Representation; neutral; Fundamental b. Relevance; Fundamental c. Faithful Representation; free from error; Fundamental d. Faithful Representation; completeness; Fundamental
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter6: Accounting Quality
Section: Chapter Questions
Problem 1QE
Related questions
Question
1. Identify the applicable qualitative characteristics referred to in the Conceptual Framework for Financial Reporting that is not adhered in the scenario below and indicate the respective group to which each characteristic belongs to. You are also required to indicate the sub-category (if applicable) to which the qualitative characteristic belong to.
- Director’s bonuses are based on profits, and they therefore make it their goal to make profits seem as high as possible. They understate expenses by recognising the minimum amount of expenses and they overstate profits by recognising the maximum profits. The information cannot be relied on as the directors select and filter the information to influence decisions.
a.
Faithful Representation; neutral; Fundamental
b.
Relevance; Fundamental
c.
Faithful Representation; free from error; Fundamental
d.
Faithful Representation; completeness; Fundamental
2.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning
Financial Reporting, Financial Statement Analysis…
Finance
ISBN:
9781285190907
Author:
James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:
Cengage Learning