Choose one or more characteristics from the following list that you could use to discuss the accounting aspects of each of the statements 1 to 5 and explain your ideas:

• Relevance 

• Understandability 

• Completeness

• Verifiability 

• Materiality 

• Predictive value

• Comparability 

• Neutrality 

• Faithful representation

1. Director: ‘We do not need to tell shareholders about a loss of £2,000 on damaged stock when our operating profit for the year is £60m.’

2. Shareholder: ‘I would prefer the statement of financial position (balance sheet) to tell me the current market value of land is £20m than to tell me that the historical cost is £5m, although I know that market values fluctuate.’

3. Analyst: ‘If the company changes its stock valuation from average cost to FIFO, I want to hear a good reason and I want to know what last year’s profit would have been on the same basis.’

4. Regulator: ‘If the company reports that it has paid “commission on overseas sales”, Idon’t expect to discover later that it really meant bribes to local officials.’

5. Director: ‘We have made a profit on our drinks sales but a loss on food sales. In the Notes to the Accounts on segmental results I suggest we combine them as “food and drink”. It will mean the annual report is less detailed for our shareholders but it will keep competitors in the dark for a while.’