The International Accounting Standards Board's (IASB) Conceptual Framework

question 105

Multiple Choice

The International Accounting Standards Board's (IASB) conceptual framework

• A) Includes the concept of prudence or conservatism which means when in doubt, choose the solution that will be least likely to overstate assets or income and/or understate liabilities or expenses.
• B) Excludes the concept of prudence or conservatism because it is inconsistent with neutrality, which encompasses freedom from bias.
• C) Includes the concept of prudence or conservatism which means when in doubt, choose the solution that will be least likely to understate assets or income and/or overstate liabilities or expenses.
• D) Includes the concept of prudence or conservatism as a desirable, but not required, quality of financial reporting information.

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Definitions:

Production Labor Wages

The total amount of compensation paid to employees directly involved in the production of goods or services.

Direct Cost

Costs that can be directly attributed to the production of a specific good or service, such as raw materials and labor directly involved in manufacturing.

Indirect Cost

Expenses that are not directly attributable to a specific product or service, often including overhead costs like utilities or rent.

Administrative Office Salaries

The wages and salaries paid to employees who work in administrative roles within an organization.