Question

The qualitative characteristics that make accounting information useful for deci sion-making purposes are as follows. Relevance Neutrality Verifiability Faithful representation Completeness Understandability Predictive value Timeliness Comparability Confirmatory value Materiality Free from error
Instructions Identify the appropriate qualitative characteristics) to be used given the information provided below.
(a) Qualitative characteristic being employed when companies in the same industry are using the same accounting principles.
(b) Quality of information that confirms users' earlier expectations
(c) Imperative for providing comparisons of a company from period to period
(d) Ignores the economic consequences of a standard or rule
(e) Requires a high degree of consensus among individuals on a given measurement
(f) Predictive value is an ingredient of this fundamental quality of information (s)
(g) Four qualitative characteristics that are related to both relevance and faithful representation
(h) An item is not recorded because its effect on income would not change a decision.
(i) Neutrality is an ingredient of this fundamental quality of accounting information )
(j) Two fundamental qualities that make accounting information useful for decision-making purposes
(j) Issuance of interim reports is an example of what enhancing quality of relevance?

Answer 1

Answer:

a) Comparability

b) Confirmatory Value

c) Comparability (Consistency)

d) Neutrality

e) Verifiability

f) Relevance

g) comparability, timeliness, verifiability, understand-ability

h) Materiality

i) faithful representation

j) Relevance, faithful representation

k) timeliness

Explanation:

Comparability provides for information to be comparable with businesses in same industry, or with its own past performances.

Confirmatory Value is the value that was initially expected and turns out to be the same as expected, as for example sales forecast.

Consistency refers to the value where same methods are applied in order to keep the reports consistent.

Neutrality refers to the quality of information where it does not depend on some particular situation and is not biased in any manner.

Verifiability refers to the information which is verifiable that means that can be checked again whether the presented information is correct or not.

Relevance refers to the quality of being important, whether at that particular time the information is relevant for the concerned argument.

Timeliness refers to the quality of  information that is prepared and presented at the concerned time. As for example the financial statements of the year 2010 shall be prepared by the end of 2010, additional time if any is allowed that shall be given but accounts  shall be prepared in the additional time allowed.

Understand ability refers to the quality of information that it shall be easily interpreted to the desired results and should be easy to understand.

Materiality refers to the quality of information that will make an impact, if the information do not make any impact it shall not be material.

Faithful representation refers to the quality that the information is true and not false in any intentional manner.