Under this qualitative characteristic, users are assumed to have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence. However, information about complex matters that should be included in the financial statements because of its relevance to the economic decision-making needs of users should not be excluded merely on the grounds that it may be too difficult for certain users to understand

Under this qualitative characteristic, users are assumed to have a reasonable knowledge of business and economic activities and accounting and a willingness to study the information with reasonable diligence. However, information about complex matters that should be included in the financial statements because of its relevance to the economic decision-making needs of users should not be excluded merely on the grounds that it may be too difficult for certain users to understand

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter2: Financial Reporting: Its Conceptual Framework

Section: Chapter Questions

Problem 2MC: Which of the following is considered a constraint on useful information by Statement of Financial...

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Similar questions

What is meant by comparability when discussing Qualitative Characteristicsof Useful Financial Information:a. Information has predictive or confirmatory value.b. Information is reasonably free from error.c. Information that is measured and reported in a similar fashion acrosscompanies.d. Information is timely.
How can the enhancing characteristic understandability be improved in high-quality accounting information? Do not simply repeat what it is, provide suggestions as to how a particular part of the enhancing characteristic could be improved. Please provide different answers and explanations than copy and pasting: “Information that is understandable to the average user of financial statements is highly desirable.”
Explain what is meant by relevance, faithful representation, and comparability and how they make financial information useful by focusing on the distinguishing fundamental characteristics between useful information and information that is not useful or misleading
Relevant definition or description is:a. Relevant financial information is capable of making a difference in thedecisions made by users.b. Relevant financial information is necessary for a user to understand thephenomenon being depictedc. Relevant financial information helps assure users that informationfaithfully represents the economice. None of the above
1. An accounting information system should be designed to provide information that is useful. To be useful the information must be: a. qualitative rather than quantitative. b. unique and unavailable through other sources. c. historical in nature and not purport to predict the future. d. marginal between two alternatives. e. relevant, accurate, and timely.
Indicate whether the following statements about the conceptual framework are true or false. If false, provide a brief explanation supporting your position. a. The fundamental qualitative characteristics that make accounting information useful are relevance and verifiability. b. Relevant information only has predictive value, confirmatory value, or both. c. Information that is a faithful representation is characterized as having predictive or confirmatory value. d. Comparability pertains only to the reporting of information in a similar manner for different companies. e. Verifiability is solely an enhancing characteristic for faithful representation. f. In preparing financial reports, it is assumed that users of the reports have reasonable knowledge of business and economic activities.
Which of the following is not a fundamental quality of useful accounting information? Group of answer choices Faithful representation. Relevance. Faithful representation and Relevance. Materiality
The Multi-Dimensional Statements Approach of Social Accounting was proposed to extend financial statements into multi-dimensional statements with all events related to each other via a monetary measure of their resource costs and benefits. But this approach suffers with which of the following hindrance? a. The multidimensional nature creates problems in measurement and quantification. b. The multidimensional approach of social accounting fails to measure the social impact in quantitative terms. c. The multidimensional approach maximizes the profit within the constraints of existing legal and ethical framework acting in the best interest of the society d. The multidimensional approach mixes with the assets and liabilities of the regular accounting and therefore shows wrong financial position of an entity
Which of the following is not a major challenge facing the accounting profession? a. Nonfinancial measurements. b. Timeliness. c. Accounting for hard assets. d. Forward-looking information.
Which of the following requires accounting information to be complete, neutral, and free from material error? Faithful representation concept Cost principle Economic entity assumption Going concern assumption
The fundamental qualitative characteristics that financial information must possess to be useful to theprimary users of general purpose financial reports—identified in the Conceptual Framework are‘relevance’ and ‘faithful representation’.a) Provide one example where information is relevant but not faithfully representedb) Provide one example where information is not relevant but is faithfully represented. c) Provide one example where information is relevant and faithfully represented.
The fundamental qualitative characteristics that financial information must possess to be useful to theprimary users of general purpose financial reports—identified in the Conceptual Framework are‘relevance’ and ‘faithful representation’.Required:a) Provide one example where information is relevant but not faithfully represented. b) Provide one example where information is not relevant but is faithfully represented. c) Provide one example where information is relevant and faithfully represented. please expalin in your own words.