Allowing firms to estimate rather than physically count inventory at interim (quarterly) periods is an example of a trade-off between
A)verifiability and reliability.
B)reliability and comparability.
C)timeliness and verifiability.
D)neutrality and consistency.

Question

Quizplus · Accepted Answer

Allowing firms to estimate inventory rather than physically counting it at interim periods sacrifices some level of verifiability (the ability to confirm the accuracy of the reported inventory through physical observation or examination) for timeliness (the ability to report financial information in a timely manner). While verifiability is still important, the need for timely information may outweigh the need for a physical count.

Allowing Firms to Estimate Rather Than Physically Count Inventory at Interim