qualitative characteristic

Question 1

period assumption

Answer 1

Reports are prepared for a specified period of time (reporting period), such as a month or a year, in order to obtain comparability of results.

Question 2

relevance

Answer 2

Financial information must be capable of influencing decisions made by users to help them make predictions and/or confirm or change their previous evaluations.

Question 3

accrual basis assumption

Answer 3

Revenue is recognised in the period in which it is earned and expenses are recognised in the period in which they are incurred.

Question 4

faithful representation

Answer 4

Financial information should be a truthful representation of the real-world economic event and must be complete, free from error and free from bias.

Question 5

verifiability

Answer 5

Financial information should allow different knowledgeable and independent observers to agree that the event is faithfully represented.

Question 6

Comparability

Answer 6

Comparability states that financial information should be able to be compared over time and compared with similar information about other businesses.

Question 7

Understandability

Answer 7

Understandability requires financial information be easy to comprehend by users with reasonable knowledge of business and economic activities. To be understandable, information should be presented clearly and concisely.