Which of these statements is correct?
A) Simplified financial reports will always be the most understandable
B) A relevant and reliable item will always be material
C) Relevance and reliability can never be in conflict
D) It is apparent from the Framework that general purpose financial reports are addressed to users with a reasonable knowledge of business and economic activities

Question

Quizplus · Accepted Answer

This statement is explicitly stated in the Conceptual Framework for Financial Reporting issued by the International Accounting Standards Board (IASB). Option A is incorrect because it is possible that a more detailed financial report may be more understandable, depending on the users' level of financial knowledge. Option B is incorrect because an item can be relevant and reliable but not material. Option C is incorrect because relevance and reliability can sometimes conflict, requiring a trade-off between the two qualities.

Which of These Statements Is Correct