Qualitative Characteristics

Question 1

Qualitative Characteristic

Answer 1

Rules that ensure
that reports are
prepared in a way
that is useful to all
users.

Question 2

Relevance

Answer 2

Relevant
information is
relevant for decision making in the firm

Question 3

Faithful Representation

Answer 3

The information
reported must be a
faithful representation
of the real-world
economic event it
represents. Free from material error and bias.

Question 4

Comparability

Answer 4

The qualitative
characteristic that
enables users to
identify and
understand
similarities in, and
differences among
different reporting periods.

Question 5

Verifiability

Answer 5

ensure that different
knowledgeable and
independent
observers can reach
a consensus (arrive
at the same
conclusion) that a
particular depiction
of an event is
faithfully
represented.

Question 6

Timeliness

Answer 6

information
available to
the firm in
time to help with decision-making

Question 7

Understandability

Answer 7

financial
information is
comprehensible to
users with
low
knowledge of
business and
economic activities.