Carcer, Alyssa Nicole D.

BAMA302
Enumerate and discuss the following:
1. Components/ingredients of faithful representation

When we say faithful representation, the financial data in financial

reports should accurately reflect what it claims to represent. That is, it should
accurately depict what occurred, with the appropriate financial values. A
faithful depiction has three characteristics: 1. Completeness, meaning it
provides a sufficient or complete presentation of all necessary facts. Second,
Neutrality or objectivity and lack of bias. And third, it must be Error-free or
no inaccuracies and omissions.

2. Qualitative characteristics of financial statements per Conceptual Framework

The two most significant qualitative characteristics are all still

relevance and faithful representation. Relevance refers to the idea that the
records by an accounting system should influence the decision-making of the
person looking at it. The term can refer to the information's content as well as
its timeliness, both of which might influence decision-making. The connection
or agreement between accounting measures or descriptions in financial
reports and the economic phenomena they purport to describe is known as
faithful representation.

3. Enhancing characteristics of financial statements per Conceptual Framework

Enhancing qualitative features is an extra benefit to the essential to

improve the decision-making use of financial data. Users' ability to detect
similarities and differences between two economic events is referred to as
comparability. Comparability between entities and consistency in applying
procedures or methods through time will improve the informational value in
relative economic performance. Verifiability relates to a user's ability to
ensure that the information accurately represents what it claims to represent,
and that the measuring technique chosen is free of bias and error. When
several experienced evaluators confirm and come to the same conclusion, the
information is verified. Meanwhile, timeliness refers to the need for users to
acquire information at the correct moment before it loses its potential to
influence a decision. Information should be presented in a timely manner to
offer shareholders with a clear and meaningful perspective. Information that
is not available when decision makers need it is useless, and the information's
potential value may be wasted. Last but not the least, understandability, it
shows the level of financial information that allows users to recognize or
discern the meaning of the message being delivered.