In reporting on its liability for long service leave to employees,a company is obliged to trade off:
A) understandability and consistency
B) relevance and reliability
C) materiality and disclosure
D) comparability and prudence.

Question

Quizplus · Accepted Answer

When reporting on long service leave liability, a company must balance the relevance (meaningful and useful to users) and reliability (accurate and complete) of the information. Both factors are important since long service leave can represent a significant financial obligation for a company and can impact its financial health. Understandability and consistency (A) are more relevant to financial statement presentation and not specific to long service leave liability reporting. Materiality and disclosure (C) are important considerations but not specific to the trade-off required for reporting long service leave liability. Comparability and prudence (D) are also important but not specific to the trade-off required for reporting long service leave liability.

In Reporting on Its Liability for Long Service Leave to Employees,a