Reference no: EM132472124

Scenario: You are listening to two accounting majors, both of whom are seniors. They are debating the merits of having relevant verses faithfully represented accounting information for external decision making. One student states, "In my decision making if given a choice between relevant and representationally faithful accounting information, I would prefer to have relevant information." The other student replies, "Nonsense! If you cannot rely on the information, then of what use is it?"

Problem 1: Based on your knowledge of the FASB's Conceptual Framework, define the qualitative characteristics of relevance and faithful representation. Include definitions of the ingredients of each. Which do you think is more important?