Which of the following is true regarding the role of professional judgment in financial reporting?
A) Accountants are always subjective in their judgments.
B) Information generated should faithfully represent transactions and be neutral and verifiable.
C) The consideration of economic and social standards implies objectivity in their development and implementation.
D) Accountants are never required to apply professional judgment.

Question

Quizplus · Accepted Answer

Professional judgment is necessary in financial reporting, but it should be used in a way that generates information that faithfully represents transactions and is neutral and verifiable. Objective standards and guidelines such as GAAP and IFRS are used in the development and implementation of professional judgment. Therefore, option B is the correct answer. Option A is incorrect as accountants strive to be objective in their judgments. Option C is partially correct but not complete as economic and social standards are not the only ones considered in the development of objective standards. Option D is incorrect as accountants are always required to apply professional judgment in financial reporting.

Which of the Following Is True Regarding the Role of Professional