BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A decrease in an asset from primary operations
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An increase in an asset from incidental transactions
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An increase in a liability from incidental transactions
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A decrease in a liability from primary operations
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Detailed explanation-1: -Decrease in a liability from primary operations. Answer (D) iscorrectRevenues are inflows or other enhancements of assets orsettlements of liabilities from activities that constitute the entity’songoing major or central operations.
Detailed explanation-2: -What Is the Conceptual Framework? The Conceptual Framework (or “Concepts Statements”) is a body of interrelated objectives and fundamentals. The objectives identify the goals and purposes of financial reporting and the fundamentals are the underlying concepts that help achieve those objectives.
Detailed explanation-3: -The objective of financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors, lenders, and other creditors in making decisions about providing resources to the entity.
Detailed explanation-4: -The conceptual framework provides a basis for considering the merits of alternative accounting methods and for developing financial accounting and reporting standards.
Detailed explanation-5: -The Exposure Draft proposed that, because profit or loss is the primary source of information about an entity’s financial performance for the period, the framework should include a presumption that all income and all expenses will be included in that statement.