The statement that is not correct concerning the definition of expenses in the Conceptual Framework is which of the following?
A) An expense arises whenever the economic benefits in an asset are consumed or lost.
B) The definition of expenses does not encompass items that have traditionally been reported in the financial statements as losses.
C) An expense must result in a decrease in equity.
D) The definition of expenses is expressed in terms of changes in assets, liabilities and equity.

Question

Quizplus · Accepted Answer

The statement that expenses do not encompass items that have traditionally been reported as losses is not correct. In fact, losses are a type of expense that result from the recognition of decreases in assets or increases in liabilities that are not related to the entity's normal operations. The other statements are all correct definitions of expenses in the Conceptual Framework.

The Statement That Is Not Correct Concerning the Definition of Expenses