Which of the following is not an enhancing qualitative characteristics of financial statements?
2-20Test Bank for Financial Accounting: Tools for Business Decision-Making,5th Canadian Edition(c)Comparability(d)Timeliness139.Accounting information should be neutral in order to enhance: Show
Get answer to your question and much more 140.Which of the following isnota main section of the conceptual framework of accounting? Get answer to your question and much more 141.Which of the following statements isnottrue?(a)Comparability means using different accounting principles from year to year within acompany.(b)Faithful representation means information must be neutral, complete, and free frommaterial error.(c)Relevant accounting information must be capable of making a difference in a user’sdecision.(d)For accounting information to be relevant, it must have timeliness. 142.A company can change to a new accounting principle if management can justify that the changewill result in: Get answer to your question and much more 143.If accounting information has predictive value, it will help users: Get answer to your question and much more The purpose of financial statements is to give financial statements information about the change in financial position, financial performance and financial position of the organization. These can provide data use in decision making such as investment, credit and economic decision making which are useful for various users. There are seven main groups of users which are public, investors, lenders, employees, customers, supplies, government and other agencies and the needs of information is different for each group, for instance, employee will interest on the profitability, retirement benefits and employment opportunities and so on. The qualitative characteristics can be categorized as fundamental (relevance and faithful representation) or enhancing (comparability, verifiability, timeliness and understandability) based on how they influence the usefulness of financial information. However, it can limited by two pervasive constraints which is cost and materiality in providing useful financial information. Fundamental Qualitative Characteristics of Financial Information
Application of the Fundamental Qualitative Characteristics of Financial InformationRelevance is the fundamental qualitative characteristic which connected to the economic phenomena and must be considered first before the other qualitative characteristics. Once the relevance is applied to distinguish which economic phenomena should be presented, faithful representation is going to determine which characteristics are best to correspond to the relevant phenomena. Therefore, relevance and faithful representation must work in a line to provide useful financial information to the users. Enhancing Qualitative Characteristics of Financial InformationEnhancing qualitative characteristics are additional benefit added to the fundamental to enhance the decision usefulness of financial information.
Application of the Enhancing Qualitative Characteristics of Financial InformationEnhancing qualitative characteristics provide additional benefit and usefulness in the financial reporting information. Therefore, the four important characteristics which are comparability, verifiability, timeliness and understandability should be extent widely. However, the enhancing qualitative characteristics will be useless if the financial information is irrelevant or not faithfully represented in fundamental step. The application of the enhancing qualitative characteristics is redundant process that does not follow priority and prescribed order. Sometimes, one or some of the enhancing qualitative characteristics will be given up to maximize the usefulness of another qualitative characteristic. If such situation happened, appropriate information or evidence should be disclosed. Constraints on Financial Reporting
Application of the Constraints on Financial ReportingMateriality is said to be one of the pervasive constraint on financial reporting because it attribute to all the qualitative characteristics. For example, materiality need to be measured when determine the sufficiency of relevant information and sufficiency of complete, neutral, and free from error to faithfully represent in financial reporting. Application of the cost constraint in financial reporting included evaluate whether the benefits of reporting information will be able to impose the costs. It is necessary to reflect on whether one or some qualitative characteristics one or some of the enhancing qualitative characteristics will be given up to reduce the cost. Related Posts:
Which of the following is not a qualitative characteristics of financial statements?It is a principle of accounting but not the part of qualitative characteristics because it helps the company to make decisions by considering all factors. Hence, (a) Materiality is the correct option.
Which are the enhancing qualitative characteristics of financial statement?The four enhancing qualitative characteristics are comparability, verifiability, timeliness and understandability.
What are the 5 enhance qualitative characteristics?Enhancing (Secondary) Qualitative Characteristics
Verifiability. Timeliness. Understandability. Comparability.
Which of the following is not a characteristics of a coherent financial reporting framework?Which of the following is not considered a characteristic of a coherent financial reporting framework? The correct answer is A. Verifiability is not regarded as a characteristic of a coherent financial reporting framework, but consistency and transparency are.
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