Question

Accounting information should be variable and free from personal bias. Name the qualative characteristic of accounting information denoted by this statement ​

Answer 1

Answer:

The demand for accounting information by investors, lenders, creditors, etc., creates fundamental qualitative characteristics that are desirable in accounting information. There are six qualitative characteristics of accounting information. Two of the six qualitative characteristics are fundamental (must have), while the remaining four qualitative characteristics are enhancing (nice to have).

Fundamental (Primary) Qualitative Characteristics

Qualitative characteristics of accounting information that must be present for information to be useful in making decisions:

Relevance

Representational faithfulness

Enhancing (Secondary) Qualitative Characteristics

Qualitative characteristics of accounting information that impact how useful the information is:

Verifiability

Timeliness

Understandability

Comparability

Relevance

Relevance refers to how helpful the information is for financial decision-making processes. For accounting information to be relevant, it must possess:

Confirmatory value – Provides information about past events

Predictive value – Provides predictive power regarding possible future events

Explanation:

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Answer 2

Answer:

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