Your best friend from high school approaches you to invest in 'e-track' an upcoming high-tech company which he is convinced will make huge profits in the future.You are sceptical of the business venture and say that you would have to look up the financial statements of the company before investing your own money.He sends you the financial report and you notice that the report is unaudited and does not provide prior years' results even though the firm had been operating for the last three years. Based on the above information,which qualitative characteristics is lacking in e-track's financial reports?
A) relevance and faithful representation
B) relevance and timeliness
C) comparability and consistency
D) faithful representation and comparability

Question

Quizplus · Accepted Answer

The lack of audited financial statements and absence of prior years' results affects the faithful representation and comparability of e-track's financial reports. Faithful representation is compromised because the unaudited report may not accurately reflect the company's financial position. Comparability is affected because without prior years' results, investors cannot compare the company's performance over time.

Your Best Friend from High School Approaches You to Invest