Question

According to the FASB conceptual framework, the rele-vance of providing information in financial statements is subject to the constraint of:
a. Comparability.

b. Cost-benefit.

c. Reliability.

d. Faithful representation.

Answer 1

Answer:

B. Cost-Benefit

Explanation:

According to the Financial Accounting Standard Board (FASB) framework, it is important to estimate the cost and benefit of information before deciding the relevance of the information. It decides when to disclose and whether to disclose the information

Once, the cost of such information outweighs the benefits of its disclosure then FASB framework terms it as not relevant.

Cost of Information

Financial reporting through the preparation of financial statements has a cost, these costs include provision, preparation as well as the audit of the information provided. The cost-benefit constraint basically intends to ensure that financial statements are most-effectively and most-efficiently prepared.