ACCA Applied Knowledge · Financial Accounting · Qualitative characteristics of useful financial information
According to the IFRS Conceptual Framework, which combination describes a faithful representation of a financial phenomenon?
A faithful representation is complete, neutral and free from error. It includes all information a user needs to understand the item, is not slanted to favour any party, and has no errors in description or process. Deliberate caution-based bias would breach neutrality.
- AComplete, neutral and free from errorCorrect
- BTimely, comparable and understandable
- CPrudent, verifiable and consistent
- DComplete, biased towards caution and verifiable
Explanation
A faithful representation is complete, neutral and free from error. Timely, comparable and understandable are enhancing characteristics. Neutrality is supported by prudence in the sense of caution, but deliberate bias towards caution is not neutral.
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