Qualitative characteristics of accounting information

1. What is the most important quality of accounting information?
--> Decision usefulness
--> The objective of accounting is to provide useful information to the users

2. What the two primary decision-specific qualities to make information useful for decisions?
--> Relevance and Reliability
--> To make information useful, information should be relevant to the decision and reliable.

3. What are the ingredients of relevance?
--> timeliness, predictive value, feedback value

4. What are the ingredients of reliability?
--> verifiability, representational faithfulness

5. What are the secondary qualities applicable for both relevance and reliability?
--> comparability

6. What is the secondary quality for reliability?
--> neutrality

7. Qualities of accounting information:

100. Decision usefulness
110. Relevance
111. timeliness
112. predictive value
113. feedback value
114. comparability

120. Reliability
121. verifiability
122. representational faithfulness
123. neutrality
124. comparability

8. To make information useful for decisions, information should be:
(A) relevant
(B) reliable

9. To make information relevant, information should have the following qualities:
(C) timeliness
(D) predictive value
(E) feedback value
(F) comparability

10. To make information reliable, information should have the following qualities:
(G) verifiability
(H) representational faithfulness
(I) neutrality
(J) comparability

11. In providing information, what is a pervasive constraint?
--> the benefits of information should be greater than the costs of information

12. What is the user-specific quality of information to be useful?
--> understandability
--> information should be understandable to be useful

13. What is the threshold for recognizing the elements of accounting information?
--> materiality
--> material items are recognized
--> items that are not material do not require recognition

14. What is materiality?
--> Information (AA) is material,
--> if the omission or misstatement of (AA)
--> probably changes or influences
--> the judgment of a reasonable person who relies on (AA)