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Two primary qualitative characteristics of financial statements are
- a)Understandability and materiality.
- b)Relevance and reliability.
- c)Relevance and understandability.
- d)Materiality and reliability
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Two primary qualitative characteristics of financial statements area)U...
The following are all qualitative characteristics of financial statements:
Understandability - The information must be readily understandable to users of the financial statements. This means that information must be clearly presented, with additional information supplied in the supporting footnotes as needed to assist in clarification.
Relevance - The information must be relevant to the needs of the users, which is the case when the information influences the economic decisions of users. This may involve reporting particularly relevant information, or information whose omission or misstatement could influence the economic decisions of users.
Reliability - The information must be free of material error and bias, and not misleading. Thus, the information should faithfully represent transactions and other events, reflect the underlying substance of events, and prudently represent estimates and uncertainties through proper disclosure.
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Two primary qualitative characteristics of financial statements area)U...
Qualitative Characteristics of Financial Statements
Financial statements are the primary means of communicating financial information to stakeholders. The financial information in these statements should be relevant, reliable, comparable, and understandable.
Relevance and Reliability
The two primary qualitative characteristics of financial statements are relevance and reliability.
Relevance
Relevance means that the financial statements contain information that is useful for decision-making purposes. Financial information is relevant if it can influence the economic decisions of users. For example, information about revenue, expenses, and profitability is relevant to investors, creditors, and other stakeholders in determining whether to invest in a company or lend it money.
Reliability
Reliability means that the financial statements are free from material errors and bias and can be depended on by users. Financial information is reliable if it is complete, accurate, and verifiable. For example, the balance sheet should accurately reflect the company's assets, liabilities, and equity, and the income statement should accurately reflect the company's revenues and expenses.
Conclusion
In conclusion, relevance and reliability are the two primary qualitative characteristics of financial statements. These characteristics are essential for providing users with useful information for decision-making purposes.
Financial statements are the primary means of communicating financial information to stakeholders. The financial information in these statements should be relevant, reliable, comparable, and understandable.
Relevance and Reliability
The two primary qualitative characteristics of financial statements are relevance and reliability.
Relevance
Relevance means that the financial statements contain information that is useful for decision-making purposes. Financial information is relevant if it can influence the economic decisions of users. For example, information about revenue, expenses, and profitability is relevant to investors, creditors, and other stakeholders in determining whether to invest in a company or lend it money.
Reliability
Reliability means that the financial statements are free from material errors and bias and can be depended on by users. Financial information is reliable if it is complete, accurate, and verifiable. For example, the balance sheet should accurately reflect the company's assets, liabilities, and equity, and the income statement should accurately reflect the company's revenues and expenses.
Conclusion
In conclusion, relevance and reliability are the two primary qualitative characteristics of financial statements. These characteristics are essential for providing users with useful information for decision-making purposes.
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Two primary qualitative characteristics of financial statements area)Understandability and materiality.b)Relevance and reliability.c)Relevance and understandability. d)Materiality and reliabilityCorrect answer is option 'B'. Can you explain this answer?
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Two primary qualitative characteristics of financial statements area)Understandability and materiality.b)Relevance and reliability.c)Relevance and understandability. d)Materiality and reliabilityCorrect answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Two primary qualitative characteristics of financial statements area)Understandability and materiality.b)Relevance and reliability.c)Relevance and understandability. d)Materiality and reliabilityCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Two primary qualitative characteristics of financial statements area)Understandability and materiality.b)Relevance and reliability.c)Relevance and understandability. d)Materiality and reliabilityCorrect answer is option 'B'. Can you explain this answer?.
Two primary qualitative characteristics of financial statements area)Understandability and materiality.b)Relevance and reliability.c)Relevance and understandability. d)Materiality and reliabilityCorrect answer is option 'B'. Can you explain this answer? for CA Foundation 2025 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Two primary qualitative characteristics of financial statements area)Understandability and materiality.b)Relevance and reliability.c)Relevance and understandability. d)Materiality and reliabilityCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Two primary qualitative characteristics of financial statements area)Understandability and materiality.b)Relevance and reliability.c)Relevance and understandability. d)Materiality and reliabilityCorrect answer is option 'B'. Can you explain this answer?.
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