Skip to content

ACCA Applied Knowledge · Financial Accounting · Qualitative characteristics of useful financial information

Under the IASB Conceptual Framework for Financial Reporting, which statement best describes the role of the cost constraint on useful financial information?

The cost constraint means financial information should be provided only when its expected benefits justify the costs of preparing and using it. It is a pervasive constraint, not a qualitative characteristic, and it does not require information to be free of cost.

  1. AInformation should be provided only if its benefits are likely to justify the costs of providing and using itCorrect
  2. BInformation should be provided only if it can be obtained at no cost to the entity
  3. CInformation should always be provided regardless of cost if it is relevant
  4. DCost is a qualitative characteristic that enhances comparability

Explanation

The Conceptual Framework identifies cost as a pervasive constraint on the information provided in financial reports. Reporting information imposes costs, and those costs should be justified by the benefits. Cost is not a qualitative characteristic, and information need not be free to be reported.

Did you get it right without looking?

One question tells you little. A timed set on Qualitative characteristics of useful financial information shows your real accuracy, how long you take and where you lose marks.

Practise Qualitative characteristics of useful financial informationFree diagnostic mock

More Qualitative characteristics of useful financial information questions