Statement of Financial Accounting Concepts No. 2 and FASB.
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1. Identify and discuss the benefits that can be expected to be derived from the FASB's conceptual framework study.
2. What is the most important quality for accounting information as identified in Statement of Financial Accounting Concepts No. 2? Explain why it is the most important.
3. Statement of Financial Accounting Concepts No. 2 describes a number of key characteristics or qualities for accounting information. Briefly discuss the importance of any three of these qualities for financial reporting purposes.
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Solution Summary
Solution includes a brief description and benefits that can be derived from FASB. It includes the identification and discussion of the most important quality for accounting information provided in the Statement of Financial Accounting Concepts No. 2. Other characteristics or qualities for accounting information are also discussed.
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1. Identify and discuss the benefits that can be expected to be derived from the FASB's conceptual frameork study.
The "Statement of Financial Accounting Concepts No. 2" (Financial Accounting Standards Board, 2008) emphasizes the reduction of costs in a company. Financial Accounting Standards Board (FASB) stated that the characteristics of accounting information are useful for decision making. "Without usefulness, there would be no benefits from information to set against its costs" (FASB, p. 2). In addition, strong control environment and relevant accounting information give hierarchy of values to the confirmation of prior expectations and costs. If a company can demonstrate a strong control environment, then "the auditor may do less corroborating, resulting in lower compliance costs" (Wagner & Dittmar, 2006, p. 134). Relevant accounting information gives to users to predict or to confirm prior expectations is costless since timeliness is an "ancillary aspect of relevance" (FASB, 2008, p. 2) and relevant information have predictive ...
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