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Differentiate between fundamental qualities and enhancing qualities for qualitative characteristics of financial information with give examples

Differentiate between fundamental qualities and enhancing qualities for qualitative characteristics of financial information with give examples

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Q1. The fundamental qualities are the basic requirements of financial reporting information. The enhancing qualities are the additional qualities over and above the basic qualities which improve the usefulness of financing information and improve decision making.

For example: Relevance and Faithful information are fundamental qualities of financial information. Understandability, comparability, verifiability and timelines are enhancing qualities of qualitative characteristics financial information.

A fundamental quality like relevant information is capable of making a difference in the decisions of end users regarding the financial information provided. Relevancy is fundamental quality since it can affect end user decision based on information provided. An enhancing quality like timeliness provides information on time to end users so that relevant information is used for decision making on time.

ekkarill92 answered 1 year ago
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