The fundamental qualitative characteristics that financial information must possess to be useful to the primary users of general purpose financial reports—identified in the Conceptual Framework are ‘relevance’ and ‘faithful representation’. Required: a) Provide one example where information is relevant but not faithfully represented. b) Provide one example where information is not relevant but is faithfully represented. c) Provide one example where information is relevant and faithfully represented.
The fundamental qualitative characteristics that financial information must possess to be useful to the primary users of general purpose financial reports—identified in the Conceptual Framework are ‘relevance’ and ‘faithful representation’. Required: a) Provide one example where information is relevant but not faithfully represented. b) Provide one example where information is not relevant but is faithfully represented. c) Provide one example where information is relevant and faithfully represented.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The fundamental qualitative characteristics that financial information must possess to be useful to the primary users of general purpose financial reports—identified in the Conceptual Framework are ‘relevance’ and ‘faithful representation’.
Required:
a) Provide one example where information is relevant but not faithfully represented.
b) Provide one example where information is not relevant but is faithfully represented.
c) Provide one example where information is relevant and faithfully represented.
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