Zenith Corporation reports its investments in debt securities at cost. This method of accounting is consistent with the qualitative characteristic of ________ from the conceptual framework.

Question

Quizplus · Accepted Answer

Faithful representation is the qualitative characteristic that requires financial statements to represent the economic substance of transactions and events, rather than merely their legal form. By reporting investments in debt securities at cost, Zenith Corporation is faithfully representing the economic substance of these investments, which is their current market value.

Zenith Corporation Reports Its Investments in Debt Securities at Cost