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NEW QUESTION: 1
NEW QUESTION: 2
Conceptually, interim financial statements can be described as emphasizing:
A. Relevance over comparability.
B. Reliability over relevance.
C. Timeliness over reliability.
D. Comparability over neutrality.
Choice "a" is correct. Interim financial statements emphasize timeliness (an element of relevance) by
providing financial information based on actual performance to date and estimates prior to year end.
Information must be available when it is needed to be useful. Reliability is impeded by the extensive use
of estimates; however, the lag until verifiability is obtained detracts from usefulness. SFAC 2 para. 56
Choice "b" is incorrect. Relevance (particularly timeliness) of information in interim financial statements is
emphasized more than reliability. Reliability is impeded by the extensive use of estimates in interim data.
Choice "c" is incorrect. Since comparability is a secondary quality of information, there should be no need
to trade off comparability for relevance (a primary quality). Choice "d" is incorrect. Neutrality is an element
of reliability (a primary quality of information. There should be NO need for a trade-off for comparability
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