【正文】 ntial equity investors, lenders, and other creditors in making decisions about providing resources to the entity. 213 According to the FASB conceptual framework, the objectives of financial reporting for business enterprises are based on? a. Generally accepted accounting principles b. Reporting on management’s stewardship. c. The need for conservatism. d. The needs of the users of the information. First Level: Basic Objectives Review LO 3 Understand the objectives of financial reporting. 214 “The FASB identified the Qualitative Characteristics of accounting information that distinguish better (more useful) information from inferior (less useful) information for decisionmaking purposes.” Second Level: Fundamental Concepts LO 4 Identify the qualitative characteristics of accounting information. Qualitative Characteristics 215 Second Level: Qualitative Characteristics LO 4 Identify the qualitative characteristics of accounting information. Illustration 22 Hierarchy of Accounting Qualities 216 LO 4 Illustration 27 Conceptual Framework for Financial Reporting Relevance 217 Second Level: Qualitative Characteristics Fundamental Quality—Relevance To be relevant, accounting information must be capable of making a difference in a decision. LO 4 Identify the qualitative characteristics of accounting information. 218 Second Level: Qualitative Characteristics Fundamental Quality—Relevance Financial information has predictive value if it has value as an input to predictive processes used by investors to form their own expectations about the future. LO 4 Identify the qualitative characteristics of accounting information. 219 Second Level: Qualitative Characteristics Fundamental Quality—Relevance Relevant information also helps users confirm or correct prior expectations. LO 4 Identify the qualitative characteristics of accounting information. 220 Second Level: Qualitative Characteristics Fundamental Quality—Relevance Information is material if omitting it or misstating it could influence decisions that users make on the basis of the reported financial information. LO 4 Identify the qualitative characteristics of accounting information. 221 LO 4 Illustration 27 Conceptual Framework for Financial Reporting Faithful Representation 222 Second Level: Qualitative Characteristics Fundamental Quality—Faithful Representation Faithful representation means that the numbers and descriptions match what really existed or happened. LO 4 Identify the qualitative characteristics of accounting information. 223 Second Level: Qualitative Characteristics Fundamental Quality—Faithful Representation Completeness means that all the information that is necessary for faithful representation is provided. LO 4 Identify the qualitative characteristics of accounting information. 224 Second Level: Qualitative Characteristics Fundamental Quality—Faithful Representation Neutrality means that a pany cannot select information to favor one set of interested parties over another. LO 4 Identify the qualitative characteristics of accounting information. 225 Second Level: Qualitative Characteristics Fundamental Quality—Faithful Representation An information item that is free from error will be a more accurate (faithful) representation of a financial item. LO 4 Identify the qualitative characteristics of accounting information. 226 Second Level: Qualitative Characteristics Enhancing Qualities LO 4 Identify the qualitative characteristics of accounting information. Information that is measured and reported in a similar manner for different panies is considered parable. 227 Second Level: Qualitative Characteristics Enhancing Qualities LO 4 Identify the qualitative characteristics of accounting information. Verifiability occurs when independent measurers, using the same methods, obtain similar results. 228 Second Level: Qualitative Characteristics Enhancing Qualities LO 4 Identify the qualitative characteristics of accounting information. Timeliness means having information available to decisionmakers before it loses its capacity to influence decisions. 229 Second L