The Framework identifies two aspects to financial information that is "relevant".These are.
A)verifiability and understandability.
B)predictability and verifiability.
C)neutrality and verifiability.
D)prudence and neutrality.
E)comparability and verifiability.

Question

Quizplus · Accepted Answer

The Framework for financial reporting, specifically the Conceptual Framework for Financial Reporting as issued by the International Accounting Standards Board (IASB), identifies several qualitative characteristics of useful financial information. Among these characteristics, relevance is a key aspect that makes financial information useful to users in making economic decisions.
Relevance in the context of financial information means that the information has the capability to make a difference in the decisions made by users. It includes two primary attributes:
1. Predictive value: Information that has value as an input to predictive processes used by investors to form their own expectations about the future.
2. Confirmatory value: Information that provides feedback about (confirms or changes) previous evaluations.
Therefore, the correct answer to the question is:
2. Predictive value and Confirmatory value.
The other terms mentioned, such as verifiability, understandability, neutrality, prudence, and comparability, are also qualitative characteristics of useful financial information, but they are not the two aspects that define the relevance of financial information. Verifiability helps to assure users that information faithfully represents what it purports to represent. Understandability means that information is presented clearly and concisely. Neutrality means that information is unbiased. Prudence is the exercise of caution when making judgments under conditions of uncertainty. Comparability means that users can identify and understand similarities and differences among items.
However, none of these pairs correctly represent the two aspects of relevance as defined in the Conceptual Framework.

The Framework Identifies Two Aspects to Financial Information That Is