U3, AOS 1 - KK1 - Qualitative Characteristics

Question 1

Relevance

Answer 1

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.

Question 2

Faithful Representation

Answer 2

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

Question 3

Verifiability

Answer 3

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

Question 4

Timeliness

Answer 4

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

Question 5

Comparability

Answer 5

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.

Question 6

Understandability

Answer 6

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