ACCA Applied Knowledge · Financial Accounting · Qualitative characteristics of useful financial information
Two independent valuers, using the same method and the same data, each conclude that a property is worth approximately $2.4 million. Which enhancing qualitative characteristic does this best illustrate?
This illustrates verifiability. Verifiability means independent, knowledgeable observers can reach broad agreement that information is a faithful representation, and here two independent valuers using the same method reach the same value. Comparability instead concerns consistency across entities or periods.
- ATimeliness
- BVerifiabilityCorrect
- CUnderstandability
- DComparability
Explanation
Verifiability means that different knowledgeable and independent observers could reach consensus that a depiction is faithfully represented. Two independent valuers agreeing is exactly this. Comparability concerns similarity across entities or periods, not agreement between observers.
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