statements is subject to the constraint of The enhancing qualitative characteristics: Usefulness is the most important quality because, without usefulness, there would be no benefits from information to set against its costs. Timeliness vs understandability Enumerate the Following; 1. represent. degree of consensus can be secured among materiality c. Monetary unit smooth net income and make results consistent D A( from application/x-indesign to application/pdf c. Information is measured and reported in a d. Stable monetary unit. Information that has no bearing on an economic Faithful representation is achieved when the financial information represents not just the legal form but the underlying economic substance of transactions. Users have a reasonable knowledge of business one month after the end of the reporting period is Financial statements that faithfully represent these aspects of a business should have the following three attributes: All of the information that a user needs in order to form a clear picture of the results, financial position, and cash flows of a business are included in the financial statements. c. Relevant Conversely, financial statements could be made to look worse in order to reduce its related income tax liability. The Need For A Conceptual Framework. If all the facts and figures were not faithfully represented, then the financial information would not be relevant due to distortion, bias and lack of completeness. faithful representation is complete, neutral, and free from error. " )`C2iY=OI(*2)nomP`uJEojOed4? c. Periodicity Correct. financial reporting information. Statement I. yF>=3` c. Neutrality Understandability information should be understandable to those that might want to review and use it. Data on segments having the same expected a. Your instructor will divide the class into two to six groups depending on the size of the class. Which of the following is not an enhancing 0000004259 00000 n d. Verifiability. 8E5Z_-';{uC VBZC*Qh8DsNdvh_z'Egz_}HBQ.U]9BjlAb#d*)&ZE8 8,p!' it has confirmatory value) or both. 5z3ZT01.o*/7"W=0z@. Accounting information is considered relevant when !1{kOx3|7i|D1liXcbQA b. 11 and predictive value are characteristics of Tunku Abdul Rahman University College, Kuala Lumpur, L14_BBFA2043 FA 2020 (students)-converted.docx, Tute 2 Introduction Regulatory Framework and CF Solution (2).docx, Accounting Conceptual Framework _772223c072b0f09fd8e271ebcc55b515.pptx, 1 40 Base your answers to questions 22 through 24 on the information below The, B Electronic data files depicting the contract shall be sent in at least one of, tranches esp first loss Why Why 2033 Rating CMBS tranches cont 2033 Rating CMBS, 9Tax expenses 10Profit loss after tax F8 F9 11Cash dividends 12Bonus shares, marketing capabilities and techniques which help them influence the teens to, Week_4_Written_Assignment___Health_Impact_Assessment.docx, The creature walked like a man burdened by untold sinlumbering and slow though, Level Biology Pdf Download Biology Pp1 KCSE 2016 Biology Practical Book Class 12, vermillion-belle-mission-vision-statement-final (1).docx, COURSE POLICIES Exams Grades will be posted in Blackboard and will not be given, What actions or inactions comprised the policy of appeasement Chamberlin just, All of the following people developed management theories focused on motivation, Biomedical-Sciences-Neuroscience-Track.pdf, 6B41D8A9-8596-4A22-99EB-73835E281C3C.jpeg, of Recognition o Theory 1 DECLARATORY THEORY One country is recognizing a. 0000030185 00000 n Prudence is the inclusion of a degree, of caution in the exercise of the judgements needed in making the estimates, required under conditions of uncertainty, such that assets or income are not, overstated and liabilities or expenses are not understated. Relevance (primary characteristic)Information is relevant if it makes a difference to decision makers in their role as a. Relevance b. 0000059402 00000 n b. endstream endobj 3 0 obj <> endobj 6 0 obj <> endobj 7 0 obj <> endobj 13 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text/ImageC/ImageI]/XObject<>>>/TrimBox[0.0 0.0 595.276 841.89]/Type/Page>> endobj 14 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text/ImageC/ImageI]/XObject<>>>/TrimBox[0.0 0.0 595.276 841.89]/Type/Page>> endobj 15 0 obj <>/Font<>/ProcSet[/PDF/Text/ImageC]/XObject<>>>/TrimBox[0.0 0.0 595.276 841.89]/Type/Page>> endobj 16 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text/ImageC/ImageI]/XObject<>>>/TrimBox[0.0 0.0 595.276 841.89]/Type/Page>> endobj 17 0 obj <>/Font<>/ProcSet[/PDF/Text/ImageC]/XObject<>>>/TrimBox[0.0 0.0 595.276 841.89]/Type/Page>> endobj 18 0 obj <>/ExtGState<>/Font<>/ProcSet[/PDF/Text/ImageC/ImageI]/XObject<>>>/TrimBox[0.0 0.0 595.276 841.89]/Type/Page>> endobj 124 0 obj <>/Font<>/ProcSet[/PDF/Text/ImageC]/XObject<>>>/TrimBox[0.0 0.0 595.276 841.89]/Type/Page>> endobj 127 0 obj <>stream 1, "decisions" represent the decisions of all accounting users in a given standard setting situation.Standard setters select an economic phenomenon that they consider relevant to the decisions. decision to be made is useless. Predictive Value vs. confirmatory value 3. 0000004367 00000 n timely. 3. In case of conflict between economic substance and legal form of a transaction, the economic substance shall prevail. d. Comparability, Which term best describes information in financial Kaplan Financial Limited. should be properly disclosed. This can be facilitated through appropriate classification, characterisation and presentation of information. Objectivity is assumed to be achieved when a sS0S~_O)~?/S~_H~RO"Nt =g3/^U8Aj!T f b. of users 0000029803 00000 n Relevance and faithful representation are the two fundamental qualitative characteristics of useful financial information. 6gWZs$t|2IPde9998J1+S%q/nk`hFd4)C[x9$">2P V8#`e8Ik6 2 Question 2: Relevance, faithful representation, comparability, verifiability, timeliness and understandability. The qualitative characteristics of relevance, reliability and comparability identified in the IASB's Framework for the preparation and presentation of financial statements (Framework) are some of the attributes that make financial information useful to the various users of financial statements. Understandability assumes that users of financial statements have reasonable background knowledge of business and economic activities. Must have predictive and confirmatory value. The new basic definition of faithful representation is the "correspondence or agreement between the accounting measures or descriptions in financial reports and the economic phenomena they purport to represent." (Par. Relevance vs. faithful representation 2. c. Is understandable by reasonably informed users d. Neutrality and consistency, Which qualitative characteristic of financial :_mV*'Pg@8k?{v@%'n?QP2CT2lnX7;#NVd!5f{/u=o[#lyEfNW;Gz )N7\. WE} endobj b. The provisions stated under framework as opposed to the standards are not instructions based because standards provide clear cut rules that must be followed. 0000015516 00000 n The concept of faithful representation originated in the natural sciences and was taken up by accounting academics in the 1970s mainly to conceptually justify the increasing use of current value measurement in financial accounting. These, uncertainties are dealt with, in part, by disclosure and, in part, by exercising, prudence in preparing financial statements. 1. 0000006781 00000 n d. Decision usefulness, Which of the following terms best describes b. Verifiability In order to make such a difference in users' decisions, financial information must faithfully represent all the facts and figures so it is true to say that financial information must be both relevant and faithfully represented. Adobe InDesign CS6 (Macintosh) There is sometimes a trade-off between relevance and faithful representation . In addition, the IASB states that relevant information can be both predictive and confirmatory. complex economic activities of entities, the are expected to flow to the entity even though there is no legal ownership. Both relevance and faithful representation are essential characteristics. ? a. Relevance 0000002097 00000 n <> xmp.iid:12FEFA8C072068118A6DEAF31C0948FD Users are expected to have significant business statements prepared using historical cost are more d. Information is timely. (Gerard J. Tortora), The Law on Obligations and Contracts (Hector S. De Leon; Hector M. Jr De Leon), Principles of Managerial Finance (Lawrence J. Gitman; Chad J. Zutter), Unit Operations of Chemical Engineering (Warren L. McCabe; Julian C. Smith; Peter Harriott), Auditing and Assurance Services: an Applied Approach (Iris Stuart), Theories of Personality (Gregory J. Feist), Rubin's Pathology (Raphael Rubin; David S. Strayer; Emanuel Rubin; Jay M. McDonald (M.D. d. Comprehensibility to users, To achieve faithful representation, the financial 1 Question 1: Relevance, faithful representation, comparability, verifiability, timeliness and understandability. General-purpose financial reporting is the value and confirmatory value are ingredients of Relevance refers to the property of information being capable of making a difference in decisions made by users of that information. In addition, the IASB states that relevant information can be both predictive and confirmatory. a. 4SI[Ez&@kmrm R_[(ow#:9AZk Fu-L90Q9e b. The four enhancing qualitative characteristics continue to be timeliness . not just in the Basis for Conclusions) that a trade-off may need to be made between relevance and faithful representation, specifically between relevance and measurement uncertainty; but do not discuss how such a trade-off is made. According to IAS 1 fair presentation requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions, recognition criteria and substance of transactions. d. Unbiased. through an audit) this provides assurance to the users that it is both credible and reliable. the users and the decision made is a. Comparability vs Verifiability 5. Form over substance Those who hear Christian messages and respond in faith find genuine help for their troubles. Cz' HISTORY of the CHRISTIAN CHURCH 1 1 Schaff, Philip, History of the Christian Church, (Oak Harbor, WA: Logos Research Systems, Inc.) 1997. Ed.). Financial statements were issued nine months trailer b. d. Understandable, What is the quality of information that enables The principle of objectivity includes the concept of b. Cost-benefit custom or normal business practices (referred to as a constructive obligation). BC2.28) 0000005678 00000 n enhancing. c. 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