(Objectives of Financial Reporting) Regis Gordon and Kathy Medford are discussing various aspects of the FASB’s pronouncement Statement of Financial Accounting Concepts No. 1, “Objectives of Financial Reporting by Business Enterprises.” Regis indicates that this pronouncement provides little, if any, guidance to the practicing professional in resolving accounting controversies. He believes that the statement provides such broad guidelines that it would be impossible to apply the objectives to presentday reporting problems. Kathy concedes this point but indicates that objectives are still needed to provide a starting point for the FASB in helping to improve financial reporting.

(a) Indicate the basic objectives established in Statement of Financial Accounting Concepts No. 1.

(b) What do you think is the meaning of Kathy’s statement that the FASB needs a starting point to resolve accounting controversies?