Question

identify which specific qualitative characteristic of accounting information is best described in each item below (for example: relevance, representational faithfulness, etc.).

1. The annual financial reports of Monkey Tree Corp. are audited by public accountants.

2. Seam Corp. and Stitch, Inc., both use the straight-line depreciation method.

3. Dickers Corp. issues its quarterly reports within five days after each quarter ends.

4. Driver Inc. segregates information that relates to one of its two subsidiaries, which was disposed of in the year but was included in its consolidated statements for prior years.

5. The CFO of WebMedia stresses that factual, truthful, unbiased information is the overriding consideration when preparing WebMedia's financial information.

6. Base Line Inc. realizes that financial information may be misrepresented or misinterpreted if all pertinent information is not included.

7. Wrong Turn Industries exercises due care and professional judgement in developing all estimates and assumptions used to prepare its financial information.

Answer 1

1. The annual financial reports of Monkey Tree Corp. are audited by public accountants - Verifiability.

2. Seam Corp. and Stitch, Inc., both use the straight-line depreciation method - Comparability

3. Dickers Corp. issues its quarterly reports within five days after each quarter ends - Timeliness.

4. Driver Inc. segregates information that relates to one of its two subsidiaries, which was disposed of in the year but was included in its consolidated statements for prior years - Comparability

5. The CFO of WebMedia stresses that factual, truthful, unbiased information is the overriding consideration when preparing WebMedia's financial information. - Neutrality

6. Base Line Inc. realizes that financial information may be misrepresented or misinterpreted if all pertinent information is not included. - Freedom from bias/omission of error

7. Wrong Turn Industries exercises due care and professional judgment in developing all estimates and assumptions used to prepare its financial information. - Reliability and Freedom from bias/omission of error