Exam DISC-IA Practice Question 2
Study guide: Exam DISC-IA
An insurer's CFO says: "We booked our GAAP loss reserves at the top of the actuary's range so that our statements are conservative, which the conceptual framework encourages." How should this claim be evaluated under FASB Concepts Statement No. 8?
- A) Correct, because prudence is a component of faithful representation
- B) Incorrect, because a deliberate lean conflicts with neutrality
- C) Correct, because conservatism is one of the enhancing characteristics
- D) Incorrect, because estimates cannot be faithfully represented at all
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