Question

SFAC No. 8, Chapter 3 identifies the qualitative characteristics that make accounting information useful. Presented below are a number of questions related to these qualitative characteristics and underlying constraints.
A. Confirmatory ValueB. Cost ConstraintC. NeutralityD. ConsistencyE. NeutrlityF. Relevance and Faithful RepresentationG. TimelinessH. RelevanceI. ComparabilityJ. Verifiability

Answer 1

Answer:

The correct answer is A. Confirmatory Value.

Explanation:

Financial information is able to influence decisions if it has predictive value, confirmatory value or both.

Financial information has predictive value if it can be used as an input in the processes used by users to predict future results. Financial information does not need to be a prediction or a forecast to have predictive value. Financial information with predictive value is used by users to carry out their own predictions.

Financial information has confirmatory value if it provides information on (confirms or changes) previous evaluations.

The predictive value and the confirmatory value of the financial information are interrelated. Information that has predictive value usually also has confirmatory value. For example, information on revenue from ordinary activities for the current year, which can be used as a basis for predicting revenue from ordinary activities in future years, can also be compared with predictions on revenue from ordinary activities for the current year that were made. in past exercises. The results of those comparisons can help a user correct and improve the processes that were used to make those earlier predictions.