AICPA Exam CPA-Financial Topic 2 Question 72 Discussion

Actual exam question for AICPA's CPA-Financial exam

Question #: 72
Topic #: 2

According to the FASB conceptual framework, which of the following situations violates the concept of reliability?

AData on segments having the same expected risks and growth rates are reported to analysts estimating future profits.

BFinancial statements are issued nine months late.

CManagement reports to stockholders regularly refer to new projects undertaken, but the financial statements never report project results.

DFinancial statements include property with a carrying amount increased to management's estimate of market value.

Show Suggested Answer

Suggested Answer: B

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.

by Rosio at Jul 27, 2023, 08:09 PM

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Barabara

1 months 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.

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Crissy

2 months 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*

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Kanisha

15 days ago

C) Management reports to stockholders regularly refer to new projects undertaken, but the financial statements never report project results.

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Venita

25 days ago

B) Financial statements are issued nine months late.

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Skye

29 days ago

A) Data on segments having the same expected risks and growth rates are reported to analysts estimating future profits.

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Jaclyn

1 months ago

C) Management reports to stockholders regularly refer to new projects undertaken, but the financial statements never report project results.

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Luther

1 months ago

B) Financial statements are issued nine months late.

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Huey

1 months ago

A) Data on segments having the same expected risks and growth rates are reported to analysts estimating future profits.

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Anthony

2 months 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.

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Yvette

2 days ago

Option D is definitely the answer. It's important for financial statements to be based on objective and verifiable information.

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Martha

3 days ago

I agree with all of you. Option A is the only one that does not violate the concept of reliability.

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Tomoko

6 days ago

I see your point. Option B is also a violation because issuing financial statements late affects their reliability.

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Toi

14 days ago

I think option C is also a violation of reliability. Reporting on new projects without showing the results is misleading.

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Layla

1 months ago

Option D is definitely the correct answer. It goes against the concept of reliability.

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Lai

2 months 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.

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