Qualitative Characteristics

Question 1

Relevance

Answer 1

Financial information must have value in terms of:
- Assisting users in making and evaluating decisions
- reflecting accountability by the preparers of financial information

Question 2

Faithful representation

Answer 2

Financial information must be free from:
- Bias
- Undue errors

Question 3

Materiality

Answer 3

If its omission, misstatement or non-disclosure has an impact on decision making, then it is material information

Question 4

Comparability

Answer 4

Achieved by comparing:
- An entity at one point in time and over time, and/or
- An entity with other entities at one point in time and over time

Question 5

Understandability

Answer 5

Information should be readily understandable by users, assuming they have a reasonable knowledge of business and economic structures. Complex information should NOT be excluded from the financial reports though as the user is able to present the reports to an accountant who can interpret the information for the user.