Qualitative Charateristics Flashcards
(6 cards)
What is Relevance in accounting?
Relevance requires financial information to be related to an economic decision. Information is relevant to a decision if it helps users to form predictions about the outcomes of past, present or future events, and/or confirms or changes their previous evaluations by providing suitable feedback.
What is Timeliness in accounting?
Timeliness means having information available to decision-makers in time to be capable of influencing their decisions.
What is Faithful representation in accounting?
Information reported must be a faithful representation of the real-world economic event it represents. The user is assured that the information presented is complete, free from any bias.
What is Comparability in accounting?
Enables users to identify and understand similarities in, and differences among, items. Information about an entity is more useful if it can be compared with similar information about other entities and with similar information about the same entity for another period or another date.
What is verifiability in accounting?
Verifiability means the ability to ensure that different knowledgeable and independent observers can reach a consensus that a particular depiction of an event is faithfully represented.
What is understandability in accounting?
Understandability requires financial information to be comprehensible to users with reasonable knowledge of business and economic activities. To be understandable, information should be presented clearly and concisely.
