CMA Intermediate · Corporate Accounting and Auditing · Conceptual Framework
Which statement about the Conceptual Framework's view of financial reports and the Framework's goals is consistent with its text?
The objective of general purpose financial reporting is the foundation of the Framework, and the qualitative characteristics, elements, recognition, measurement and presentation concepts flow logically from it. Reports rest largely on estimates and judgements, and the ideal vision is unlikely to be fully achieved in the short term.
- AFinancial reports are exact depictions, free from estimates, judgements and models
- BThe Framework's vision of ideal reporting is likely to be fully achieved in the short term
- CThe objective of general purpose financial reporting forms the foundation, and other aspects such as qualitative characteristics, elements, recognition and measurement flow logically from itCorrect
- DQualitative characteristics are independent of the objective and are set separately
Explanation
Paragraph 1.1 says the objective forms the foundation and that qualitative characteristics, cost constraint, reporting entity, elements, recognition, measurement and presentation flow from it. Paragraph 1.11 says reports rely largely on estimates, judgements and models, and the ideal is unlikely to be fully achieved in the short term, which rules out the other options.
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