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CMA Foundation · Fundamentals of Financial and Cost Accounting · Four Frameworks of Accounting and Forms of Organization

Which qualitative characteristic of financial information is mainly satisfied when a company discloses its accounting policies and changes in them, so that statements of different years can be compared?

Consistency is the characteristic satisfied. Using the same accounting policies year after year, and disclosing any change, allows users to compare financial statements of different periods, which is exactly what comparability across years requires.

  1. AConsistencyCorrect
  2. BMateriality
  3. CTimeliness
  4. DPrudence

Explanation

Consistency means applying the same accounting policies from period to period and disclosing any change, which lets users compare years. Materiality concerns the significance of an item, timeliness concerns availability of information when needed, and prudence concerns caution in uncertainty, so none of them is the main point here.

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