In 1980 the FASB issued SFAC2,'Qualitative Characteristics of Accounting Information' which differed from its predecessors by:
A) including extra characteristics
B) calling for the harmonisation of different versions of the characteristics
C) dropping several characteristics
D) arranging the characteristics in a hierarchy

Question

Quizplus · Accepted Answer

SFAC2 differed from its predecessors by arranging the characteristics of accounting information in a hierarchy, instead of listing them separately. The hierarchy included fundamental characteristics (relevance and faithful representation) at the top, followed by enhancing characteristics (comparability, verifiability, timeliness, and understandability) that improve the usefulness of financial information. Therefore, option D is the correct answer.

In 1980 the FASB Issued SFAC2,'Qualitative Characteristics of Accounting Information