Module 2: Qualitative Characteristics of Financial Statements Flashcards

1
Q

What are the basic qualitative characteristics?

A

URRC

  1. Understandability: readily understandable to users of the FS
  2. Relevance: relevant to needs of the users to help influence their decisions
  3. Reliability: apply proper disclosure, free from material error, bias, or misleading information
  4. Comparability: easily comparable to other financial statements presented in other periods to identify financial performance trends of the reporting entity
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2
Q

What are the enhancing qualitative characteristics?

A

VCUT

  1. Verifiability: accounting information provided in FS must be verifiable by independent accountants
  2. Comparability: standardized FS means it can be compared to FS of other business organizations
  3. Understandability: financial information should be presented Clearly, Concisely, and Orderly to be easily comprehensible/ knowledgeable (CCOKE).
  4. Timeliness - how quickly information is available to users of accounting information. (Monthly, Quarterly, Semi-Annually, and Annually)
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