What is Qualitative characteristics of useful information?
In short
The qualitative characteristics are the attributes that make financial information useful. The two fundamental ones are relevance and faithful representation; comparability, verifiability, timeliness and understandability enhance them.
Key takeaways
- Relevance comprises predictive value, confirmatory value and materiality.
- Faithful representation means the information is complete, neutral and free from error.
- Enhancing characteristics can't make information useful if it is irrelevant or not faithfully represented.
Where it's tested
FAR: Conceptual Framework & Financial Statement Presentation — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Under the FASB conceptual framework, which of the following is one of the two fundamental qualitative characteristics of useful financial information?