You are listening to two accounting majors, both of whom are seniors. They are debating the merits of having relevant versus reliable accounting information for external decision making. One student states: “In my decision making, if given a choice between relevant and reliable accounting informa- tion, I would prefer to have relevant information.” The other student replies: “Nonsense! If you cannot rely on the infor- mation, then of what use is it?” Required Based on your knowledge of the FASB’s conceptual frame- work, define the qualitative characteristics of relevance and reliability. Include definitions of the ingredients of each. Which do you think is more important?
You are listening to two accounting majors, both of whom are seniors. They are debating the merits of having relevant versus reliable accounting information for external decision making. One student states: “In my decision making, if given a choice between relevant and reliable accounting informa- tion, I would prefer to have relevant information.” The other student replies: “Nonsense! If you cannot rely on the infor- mation, then of what use is it?” Required Based on your knowledge of the FASB’s conceptual frame- work, define the qualitative characteristics of relevance and reliability. Include definitions of the ingredients of each. Which do you think is more important?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter2: Financial Reporting: Its Conceptual Framework
Section: Chapter Questions
Problem 2C
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You are listening to two accounting majors, both of whom are seniors. They are debating the merits of having relevant versus reliable accounting information for external decision making. One student states: “In my decision making, if given a choice between relevant and reliable accounting informa- tion, I would prefer to have relevant information.” The other student replies: “Nonsense! If you cannot rely on the infor- mation, then of what use is it?”
Required
Based on your knowledge of the FASB’s conceptual frame- work, define the qualitative characteristics of relevance and reliability. Include definitions of the ingredients of each. Which do you think is more important?
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