Qualitative Charecteristics Diagram (SFAC No. 8)

Question 1

Decision Usefulness

Answer 1

Overall Objective

Question 2

Cost Effectiveness

Answer 2

Persuasive Constraint (benefits must exceed cost)

Question 3

What are two Primary Characteristics of Decision Usefulness

Answer 3

Relevance and Faithful Representation

Question 4

Relevance meaning?

Answer 4

Input to a decision

Question 5

Faithful Representation Meaning?

Answer 5

Agreement between the measure and what it claims to represent (previously called reliability)

Question 6

What are the three Relevance Components?

Answer 6

Predictive Value-Can be used to make predictions; Confirmatory Value-Confirms prior beliefs; Materiality-Entity specific (2500 to waffle house or coca cola)

Question 7

What are the three Faithful Representation Components?

Answer 7

Completeness-all necessecary information is completed; Neutrality-free from bias, Free from Material Errors.

Question 8

What are the Enhancing Characteristics of Decision Usefulness?

Answer 8

Comparability or consistency-overtime and across companies; Verifiability-consensus; Timeliness-info in time to make decisions, Understandability-user specific.