Chapter 1 - QC's

Question 1

Relevance

Answer 1

financial information must be capable of making a difference to the decisions made by users by helping them to from prediction and/or confirm or change their previous evaluations

Question 2

Faithful Representation

Answer 2

financial information should be a faithful representation of the real-world economic event it claims to represent: complete, free from material error and neutral (without bias)

Question 3

Verifiability

Answer 3

financial information should allow different knowledgeable and independent observers to reach a consensus (agree) that an event is faithfully represented. This is maintained by source documents used to record transactions.

Question 4

Comparability

Answer 4

financial information should be able to be compared with similar information about other entities and with similar information about the same entity for another period or another date

Question 5

Timeliness

Answer 5

financial information should be available to decision makers in time to be capable of influencing their decisions

Question 6

Understandability

Answer 6

financial information should be understandable or comprehensible to users with a reasonable knowledge of business and economic activities, and presented clearly and concisely