Which statement relating to the Conceptual Framework's concept of understandability is incorrect?
A) Information about complex matters should be included in the reports if it is considered relevant to decision making.
B) It is expected that users of financial statements will be willing to study the information with reasonable diligence.
C) The financial reports are required to be simple to read and understand.
D) It is assumed that readers of financial reports have a reasonable knowledge of business and economic activities.

Question

Quizplus · Accepted Answer

The incorrect statement is C. The Conceptual Framework does not require financial reports to be simple to read and understand. Instead, it requires financial reports to be presented in a way that helps users understand the information presented. This means that, while presenting information clearly and concisely, complexity of information should not be compromised if it is relevant to decision making.

Which Statement Relating to the Conceptual Framework's Concept of Understandability