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.

Required:

(a) For each of the following pairs of information characteristics, give

an example of a situation (must use your own words) in which one

of the characteristics may be sacrificed in return for a gain in the

other.

In your own words, explain in detail on below with a situation; the proper

reference and citation must be provided.

(i) Comparability and consistency.

(ii) Relevance and understandability.

(iii) Relevance and faithful representation.

(iv) Relevance and consistency.

(b) Determine the criterion should be used to evaluate trade-offs amongst information characteristics.