Financial Accounting-Conceptual Framework

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Term



Which ONE of the following terms best describes information in
financial statements that
is neutral?
A Understandable
B Reliable
C Relevant
D Unbiased

, (A) Users should be willing to study the information with reasonable diligence
The correct answer is drawn from the Conceptual Framework for Financial
Reporting
2010 "it is assumed that users have a REASONABLE KNOWLEDGE of business
and
accounting and a willingness to study with REASONABLE DILIGENCE the
information
provided."
Answer C is not referred in any qualitative characteristics.
Answer D is a matter of reliability.




(D) Unbiased
The Framework (para 36) refers to information in financial statements as
being neutral if it is free from bias ("Management should present
information which is neutral, ie free from
bias" as a matter of reliability). Bias is defined as information being
presented that attempts to predetermine a reader's decision or judgement
arising from the financial
statements.




(B) Realisable value
The correct answer is "Realisable value" as defined in the IASB Framework para
4.55.