The Framework for the Preparation and Presentation of Financial Statements examines the characteristics of accounting information that make this information useful for decision-making. It also points out that various limitations, which are inherent in the measurement and reporting process, may necessitate trade-offs between these limitations and the positive characteristics of useful information.

1 Briefly describe the following characteristics of useful accounting information:

a relevance b faithful representation c understandability d comparability e timeliness f verification.

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:

a relevance and verification b faithful representation and timeliness c comparability and relevance d relevance and understandability.