The most accurate statement of the FASB's position on conservative accounting is:
A) The FASB favors conservatism in both its conceptual framework and in all of its existing standards.
B) The FASB is against conservatism in its conceptual framework and in all of its existing standards.
C) The FASB is against conservatism all of its existing standards, but in its conceptual framework it favors conservative accounting.
D) The FASB is against conservatism in its conceptual framework, but some of the existing standards use a conservative approach.

Question

Quizplus · Accepted Answer

The FASB believes that its conceptual framework should be neutral, meaning not biased towards conservatism or optimism. However, some of the existing standards do use a conservative approach, such as the lower-of-cost-or-market rule for inventory valuation. Therefore, D is the most accurate statement of the FASB's position on conservative accounting.

The Most Accurate Statement of the FASB's Position on Conservative