Information

Question 1

Name the Fundamental characteristics of good information

Answer 1

1) Faithful Representation
2) Relevance

Question 2

What does Faithful Representation mean?

Answer 2

• Substance over form
• Represents economic phenomena

Question 3

State examples of Faithful representation

Answer 3

• Sell + buy back = LOAN
• Convertible Loans is always split between Equity + Debt
• No 0% finance - So interest is always taken out of the inflated cost price
• Redeemable Preference Shares - shown as debt - never equity
• Factored Receivables WITH recourse (“FULL recourse”) - There are still receivables until the debtor has paid