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Accounting information provides useful information about business transactions and events. Those who provide and use financial reports must often select and evaluate accounting alternatives. The Conceptual Framework examines the characteristics of accounting information that make it useful for decision- making. It also points out that various limitations inherent in the measurement and reporting process may necessitate trade-offs or sacrifices among the characteristics of useful information. Instructions 1. Describe briefly the following characteristics of useful accounting information. 1. Relevance. 2. Faithful representation. 3. Understandability, 4. Comparability (consistency). 5. Neutrality. 2. For each of the following pairs of information characteristics, give an example of a situation in which one of the characteristics may be sacrificed in return for a gain in the other, 1. Relevance and faithful representation. 2. Relevance and consistency. 3. Comparability and consistency. 4. Relevance and understandability

Accounting information provides useful information about business transactions and events. Those who provide and use financial reports must often select and evaluate accounting alternatives. The Conceptual Framework examines the characteristics of accounting information that make it useful for decision- making. It also points out that various limitations inherent in the measurement and reporting process may necessitate trade-offs or sacrifices among the characteristics of useful information. Instructions 1. Describe briefly the following characteristics of useful accounting information. 1. Relevance. 2. Faithful representation. 3. Understandability, 4. Comparability (consistency). 5. Neutrality. 2. For each of the following pairs of information characteristics, give an example of a situation in which one of the characteristics may be sacrificed in return for a gain in the other, 1. Relevance and faithful representation. 2. Relevance and consistency. 3. Comparability and consistency. 4. Relevance and understandability

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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answer no 2 the relevance and understanability
Accounting information provides useful information about business transactions and events. Those who provide and use financial reports must often select and evaluate accounting alternatives. The Conceptual Framework examines the characteristics of accounting information that make it useful for decision- making. It also points out that various limitations inherent in the measurement and reporting process may necessitate trade-offs or sacrifices among the characteristics of useful information. Instructions 1. Describe briefly the following characteristics of useful accounting information. 1. Relevance. 4 2. Faithful representation. 3. Understandability 4. Comparability (consistency). 5. Neutrality. 2. For each of the following pairs of information characteristics, give an example of a situation in which one of the characteristics may be sacrificed in return for a gain in the other. 1. Relevance and faithful representation. 7. 8. 2. Relevance and consistency. 3. Comparability and consistency. 4. Relevance and understandability 6. 10 11
Transcribed Image Text:Accounting information provides useful information about business transactions and events. Those who provide and use financial reports must often select and evaluate accounting alternatives. The Conceptual Framework examines the characteristics of accounting information that make it useful for decision- making. It also points out that various limitations inherent in the measurement and reporting process may necessitate trade-offs or sacrifices among the characteristics of useful information. Instructions 1. Describe briefly the following characteristics of useful accounting information. 1. Relevance. 4 2. Faithful representation. 3. Understandability 4. Comparability (consistency). 5. Neutrality. 2. For each of the following pairs of information characteristics, give an example of a situation in which one of the characteristics may be sacrificed in return for a gain in the other. 1. Relevance and faithful representation. 7. 8. 2. Relevance and consistency. 3. Comparability and consistency. 4. Relevance and understandability 6. 10 11
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