Qualitative Characteristics Definitions

Question 1

Timeliness

Answer 1

Having information available to decision-makers in time to be capable of influencing their decisions

Question 2

Relevance

Answer 2

Requires that reports include all financial information that has the ability tomake a difference to decision-making.

Question 3

Understandability

Answer 3

Financial information should be made understandable to users with reasonable knowledge of business and accounting.

Question 4

Faithful Representation

Answer 4

The user is assured that the information presented is complete, without bias, free from material error and neutralin order to accurately represent the real-world economic event it relates to.

Question 5

Comparibility

Answer 5

Accounting reports should be prepared in a consistent manner so that they are able to be compared over time and between businesses to identify similarities and differences in the financial reports.

Question 6

Verifyability

Answer 6

Independent observers should be able to reach the same conclusion that a particular depiction of an event is faithfully presented. Is maintained by retention of evidence, such as source documents to provide a double checking method.