Qualitative Characteristics Flashcards

1
Q

Relevance

A

Financial information must be capable of making a difference to the decisions made by users by helping them to form predictions and/or confirm or change previous evaluations.

Materiality: the size or significant of financial
information, determined by considering whether
omitting it or misstating it form the reports could
influence decisions that users make.

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2
Q

Faithful Representation

A

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

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3
Q

Verifiability

A

Financial information should allow different knowledgeable and independent observers to reach a consensus (agree) that an event is faithfully represented

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4
Q

Comparability

A

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.

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5
Q

Timeliness

A

Financial information should be available to decision makers in time to be capable of influencing decisions.

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6
Q

Understandability

A

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

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