When there is agreement between a measure or description and the phenomenon it purports to represent, information possesses which characteristic?

Multiple Choice

• Verifiability.

• Timeliness.

• Faithful representation.

• Predictive value.

Answer: 3^rd option

Financial statements (income statement, balance sheet, statement of retained earnings, and cash flow statement) must be presented in a way so that there must be an agreement between the measure and report. This indicates faithfulness and becomes very important because of involvement of interest of various stakeholders.

Example: Suppose sales revenue is reported as $150,000 in the income statement; the measure of such $150,000 must be accurately done through sales ledger account.