Question

Match the qualitative characteristics below with the following statements.1. Timeliness 5. Faithful representation2. Completeness 6. Relevance3. Free from error 7. Neutrality4. Understandability 8. Confirmatory value

1. Quality of information that assures users that information represents the economic phenomena that it purports to represent.
2. Information about an economic phenomenon that corrects past or present expectations based on previous evaluations.
3. The extent to which information is accurate in representing the economic substance of a transaction.
4. Includes all the information that is necessary for a faithful representation of the economic phenomena that it purports to represent.
5. Quality of information that allows users to comprehend its meaning.

Short answer

The matching for qualitative characteristics are as follows:

• Faithful representation
• Confirmatory value
• Free from error
• Completeness
• Understandability

Step-by-step solution

Meaning of Faithful Representation

The termfaithful representationhelps users offinancial statements to obtain valuable business-related information, which in turn helps in making sound business decisions.

Explanation for Statement ‘a’

Faithful representation in accounting means that the accounting transactions and events are to be recorded in such a way that it presents the true economic condition of the business.

Financial reports should be faithfully represented so that the economic decisions become useful. Good financial reports also help in the allocation of resources.

Hence, faithful representation is the correct answer for the statement ‘a’.

Explanation for Statement ‘b’

Confirmatory value means that the information gives feedback on earlier evaluations. It allows users to make changes in their opinion on such evaluations.

Therefore, the confirmatory value is the correct answer for the statement ‘b.’

Explanation for Statement ‘c’

Free from error in accounting means that there are no errors incurred in the process by which the financial information was produced.

The financial statements should be error-free so that the information present within them shows the true and fair view of the organization.

Hence, free from error is the correct answer for the statement ‘c.’

Explanation for Statement ‘d’

Completeness in accounting means that the financial statements are well equipped with every item that should be included in the statement for a particular accounting period.

Thus, completeness is the correct answer for the statement ‘d’.

Explanation for Statement ‘e’

The term understandability in accountingrefers to the way of representation of financial information that is easily understandable to the users.

In order to make the financial information to be easily understandable by the users, the information should be complete, concise, clear, and well organized.

Hence, understandability is the correct answer for the statement ‘e.’