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Qualitative Characteristics of Accounting Information

Qualitative Characteristics

The following is a list of qualitative characteristics of useful accounting information identified in the FASB’s Statement of Financial Accounting Concepts No. 8 and statements describing the qualities.

A. Comparability

B. Decision usefulness

C. Relevance

D. Faithful representation

E. Predictive value

F. Confirmatory value

G. Verifiability

H. Neutrality

I. Free from error

J. Consistency

K. Materiality

L. Timeliness

M. Understandability

N. Completeness

Required:

Select the appropriate letter identifying each quality on the statement describing the quality.

QuestionsAnswers
1.Different knowledgeable and independent observers can reach consensus that a particular representation is faithful.G. Verifiability
2.Making information available to decision makers before it loses its capacity to influence decisionsL. Timeliness
3.Capacity to make a difference in a decision, enabling users to predict future outcomes and/or confirm prior expectationsC. Relevance
4.Overall objective of financial informationB. Decision usefulness
5.Absence of bias intended to influence financial statement users’ behavior in a particular directionH. Neutrality
6.Presented as accurately as possible, using a process that reflects the best available inputsI. Free from error
7.Helps decision makers form expectations about the futureE. Predictive value
8.Full disclosure of all the information necessary to understand the information being reportedN. Completeness
9.Enables users to identify and explain similarities and differences between two or more sets of economic factsA. Comparability
10.The nature and magnitude of an omission or misstatement that would influence the judgment of reasonable users of that informationK. Materiality
11.Accounting methods and procedures applied in the same manner from period to periodJ. Consistency
12.Helps decision makers confirm or correct prior predictions or expectationsF. Confirmatory value
13.When the words and amounts accurately depict the economic substance of what they purport to depictD. Faithful representation
14.Comprehensible to usersM. Understandability

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