Qualitative characteristics Flashcards
What is the definition of Relevance
Financial information must be capable of making a difference to the decisions made by users.
What is the definition of Faithful Representation?
Financial information should be a faithful representation of the real-world economic event it claims to represent: complete, free from material error and without bias.
What is the definition of Verifiability?
Financial information should allow different knowledgeable and independent observers to reach a consensus (agree) that an event is faithfully represented.
What is the definition of Comparability?
Financial information should be able to be compared with similar information.
What is the definition of Timeliness?
Financial information should be available to decision-makers in time to be capable of influencing their decisions.
What is the definition of Understandability?
Financial information should be understandable or comprehensible to users with a reasonable knowledge of business and economic activities, and presented clearly and concisely.
