Which of the following statement(s)is/are true of the qualitative characteristic "reliability"?
A)Information that is free from material bias and error.
B)Information that faithfully represents what it purports to represent.
C)Information that should affect the decisions of financial statement users.
D)All of the given answers.
E)Information that is free from material bias and error,and that faithfully represents what it purports to represent.

Question

Quizplus · Accepted Answer

The qualitative characteristic "reliability" in the context of financial reporting refers to the degree to which the information presented in financial statements is verifiable, free from bias, and faithfully represents what it claims to represent. Therefore, the statements that are true of the qualitative characteristic "reliability" are:
1. Information that is free from material bias and error.
2. Information that faithfully represents what it purports to represent.
These two points are aspects of reliability that ensure the information is dependable and can be used with confidence by users of the financial statements.
Statement 3, "Information that should affect the decisions of financial statement users," is more closely related to the qualitative characteristic of relevance rather than reliability. Relevance means the information provided in financial statements should be capable of influencing the decisions of users by helping them evaluate past, present, or future events or confirming, or correcting their past evaluations.
Statement 4, "All of the given answers," is incorrect because statement 3 does not pertain to reliability but to relevance.
Statement 5, "Information that is free from material bias and error, and that faithfully represents what it purports to represent," is a combination of statements 1 and 2 and is a correct description of the reliability characteristic.
Therefore, the correct answer is:
5. Information that is free from material bias and error, and that faithfully represents what it purports to represent.

Which of the Following Statement(s)is/are True of the Qualitative Characteristic