ACCA Applied Knowledge · Financial Accounting · Qualitative characteristics of useful financial information
Information is relevant under the Conceptual Framework if it is capable of making a difference to users' decisions. Which pair of attributes can make information capable of making such a difference?
Predictive value and confirmatory value. Information is relevant when it helps users forecast future outcomes or confirms or corrects their earlier evaluations, so it can influence decisions. Neutrality and completeness belong to faithful representation, while the other pairs are enhancing characteristics.
- APredictive value and confirmatory valueCorrect
- BNeutrality and completeness
- CVerifiability and timeliness
- DComparability and understandability
Explanation
Relevant information has predictive value, confirmatory value, or both. Neutrality and completeness relate to faithful representation. Verifiability, timeliness, comparability and understandability are enhancing characteristics.
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