Fundamental qualitative characteristics include
A) relevance and comparability.
B) representational faithfulness and timeliness.
C) relevance and representational faithfulness.
D) verifiability and relevance.

Question

Quizplus · Accepted Answer

The fundamental qualitative characteristics of financial information are relevance and representational faithfulness. Relevance means that the information is capable of influencing decisions, while representational faithfulness means that the information accurately represents the underlying economic event or transaction. Comparability and verifiability are enhancing qualitative characteristics that help ensure the information is useful and reliable, respectively, but they are not fundamental characteristics. Timeliness is a constraint on financial reporting, not a quality characteristic.

Fundamental Qualitative Characteristics Include