Inconsistent Statements on Accounting Principles

The following two statements have been taken directly or with some modification from the accounting literature.

Statement 1. Accounting is a service activity. its function is to provide quantitative financial information that is intended to be useful in making economic decisions about and for companies. Thus, the accounting function might be viewed primarily as being a tool or device for providing quantitative financial information to management to facilitate decision making.

Statement 2. Financial statements that were developed in accordance with generally accepted accounting principles should be conservative.

1 List the fallacies, half-truths, circular reasoning, erroneous comments or conclusioins and/or inconsistencies.

2. Explain by what authority and/or on what basis each item listed can be considered to be fallacious circular, inconsistent, a half-truth, or an erroneous comment or conclusion. If the statement or portion of it is merely out of context, indicate the context in which the statement would be correct.