Which of the following is/are constraints in the financial reporting process?
A)Classifying an item as a revenue versus an expense in the income statement.
B)Using the historical cost versus the fair value method to measure transactions.
C)Recognizing an item as an asset versus a liability in the balance sheet.
D)Benefits of information versus the costs of producing that information.

Question

Quizplus · Accepted Answer

The benefits of information versus the costs of producing that information is a constraint in the financial reporting process. The costs of gathering and processing the information should not outweigh the benefits gained from using that information. Choices A, B, and C involve accounting policies and methods, which are not constraints but rather factors that can affect financial reporting.

Which of the Following Is/are Constraints in the Financial Reporting