E1.4 (LO 2) (Usefulness, Objective of Financial Reporting, Qualitative Characteristics) Indicate whether the following statements about the conceptual framework are true or false. If false, provide a brief explanation supporting your position.

E1.4 (LO 2) (Usefulness, Objective of Financial Reporting, Qualitative Characteristics) Indicate whether the following statements about the conceptual framework are true or false. If false, provide a brief explanation supporting your position.

The fundamental qualities characteristics that make accounting information useful are relevance and verifiability.

False. It is relevance and faithful representation. Verifiability would be an enhancing quality of relevance and faithful representation.

Relevant information only has predictive value, confirmatory value, or both.

False. Relevant information must also be material. In total, it has to be material, predictive value, and confirmatory value,

Information that has faithful representation is characterized as having predictive or confirmatory value.

False. That would be under relevance. It would actually have information that is complete and doesn’t have omitted information (completeness), information that was not specifically hand selected to favor the company (neutraility), and is information as free of mistakes as possible (free from error).

Comparability pertains only to the reporting of information in a similar manner for different companies.

False. Consistency is also included in the concept of comparability.

Verifiability is solely an enhancing characteristic for faithful representation.

False. it belongs to both fundamental qualities Relevance and Faithful representation.

In preparing financial reports, it is assumed that users of the reports have reasonable knowledge of business and economic activities.

True.