ACCA Applied Knowledge · Financial Accounting · Qualitative characteristics of useful financial information
Which of the following statements about the enhancing qualitative characteristics in the IFRS Conceptual Framework is correct?
The correct statement is that enhancing characteristics should be maximised to the extent possible and may involve trade-offs with each other. They only improve information that is already relevant and faithfully represented, and complex information should not be excluded just because it is hard to understand.
- AThey can make information useful even if it is neither relevant nor faithfully represented
- BThey should be maximised to the extent possible, and applying them is sometimes a matter of trade-off with each otherCorrect
- CUnderstandability requires information to be excluded if it is complex
- DTimeliness means information must always be prepared before the reporting date
Explanation
Enhancing characteristics improve usefulness of information that is already relevant and faithfully represented; they cannot rescue information lacking those. They should be maximised where possible, and one may need to be reduced to maximise another. Complex information must not be excluded merely because it is difficult to understand.
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