Question 1

Identify the appropriate qualitative characteristic(s) to be used for given the information provided below.

(a)		Qualitative characteristic being employed when companies in the same industry are using the same accounting principles.		CompletenessUnderstandabilityNeutralityRelevanceMaterialityComparability, Verifiability, Timeliness, and UnderstabilityFaithful RepresentationTimelinessComparabilityPredictive valueConfirmatory ValueFree From ErrorRelevance and Faithful RepresentationVerifiability
(b)		Quality of information that confirms users earlier expectations.		Predictive valueCompletenessUnderstandabilityNeutralityMaterialityRelevance and Faithful RepresentationConfirmatory ValueComparability, Verifiability, Timeliness, and UnderstabilityComparabilityTimelinessFaithful RepresentationVerifiabilityFree From ErrorRelevance
(c)		Imperative for providing comparisons of a company from period to period.		MaterialityComparability, Verifiability, Timeliness, and UnderstabilityTimelinessRelevanceConsistencyRelevance and Faithful RepresentationFaithful RepresentationFree From ErrorVerifiabilityPredictive valueConfirmatory ValueUnderstandabilityCompletenessNeutrality
(d)		Ignores the economic consequences of a standard or rule.		RelevanceConfirmatory ValueTimelinessComparabilityFaithful RepresentationMaterialityUnderstandabilityNeutralityCompletenessPredictive valueVerifiabilityFree From ErrorRelevance and Faithful RepresentationComparability, Verifiability, Timeliness, and Understability
(e)		Requires a high degree of consensus among individuals on a given measurement.		TimelinessVerifiabilityCompletenessComparability, Verifiability, Timeliness, and UnderstabilityRelevanceMaterialityUnderstandabilityFaithful RepresentationConfirmatory ValueComparabilityNeutralityFree From ErrorPredictive valueRelevance and Faithful Representation
(f)		Predictive value is an ingredient of this fundamental quality of information.		CompletenessFaithful RepresentationConfirmatory ValueRelevance and Faithful RepresentationTimelinessVerifiabilityComparability, Verifiability, Timeliness, and UnderstabilityNeutralityMaterialityRelevanceUnderstandabilityPredictive valueComparabilityFree From Error
(g)		Four qualitative characteristics that are related to both relevance and faithful representation.		Comparability, Verifiability, Timeliness, and UnderstabilityConfirmatory ValueRelevance and Faithful RepresentationPredictive valueCompletenessVerifiabilityTimelinessRelevanceFaithful RepresentationUnderstandabilityNeutralityComparabilityFree From ErrorMateriality
(h)		An item is not recorded because its effect on income would not change a decision.		MaterialityRelevance and Faithful RepresentationFaithful RepresentationNeutralityRelevanceFree From ErrorUnderstandabilityCompletenessComparabilityComparability, Verifiability, Timeliness, and UnderstabilityTimelinessPredictive valueConfirmatory ValueVerifiability
(i)		Neutrality is an ingredient of this fundamental quality of accounting information.		Free From ErrorMaterialityUnderstandabilityVerifiabilityPredictive valueFaithful RepresentationComparabilityRelevance and Faithful RepresentationNeutralityTimelinessCompletenessComparability, Verifiability, Timeliness, and UnderstabilityConfirmatory ValueRelevance
(j)		Two fundamental qualities that make accounting information useful for decision-making purposes.		Confirmatory ValueUnderstandabilityComparability, Verifiability, Timeliness, and UnderstabilityComparabilityFree From ErrorTimelinessVerifiabilityMaterialityRelevanceFaithful RepresentationNeutralityRelevance and Faithful RepresentationPredictive valueCompleteness
(k)		Issuance of interim reports is an example of what enhancing quality of relevance?		TimelinessRelevanceConfirmatory ValueFree From ErrorRelevance and Faithful RepresentationVerifiabilityUnderstandabilityComparabilityNeutralityComparability, Verifiability, Timeliness, and UnderstabilityFaithful RepresentationPredictive valueCompletenessMateriality