Financial accounting and reporting provide information that is used in decision making regarding the allocation of resources. In Statement of Financial Accounting Concepts No. 1, “Objectives of Financial Reporting by Business Enterprises,” the FASB defined the following basic objectives of financial reporting: Financial reporting should provide understandable information to present and potential users:
• That is useful in making rational decisions.
• That facilitates assessing the amounts, timing, and uncertainty related to the company’s cash flows.
• About the company’s economic resources, its claims to those resources, and the changes in its resources and obligations occurring from earnings and other operating activities. The qualitative characteristics of useful accounting information were identified in the FASB’s Statement of Financial Accounting Concepts No. 2, “Qualitative Characteristics of Accounting Information.” These characteristics distinguish better information (more useful) from inferior information (less useful).

Required
1. For the primary quality relevance,
a. Define relevance
b. Explain the meaning and importance of each of the three ingredients of relevance
2. For the primary quality reliability,
a. Define reliability
b. explain the meaning and importance of each of the three ingredients of reliability
3. Explain the concepts of
a. Comparability
b. Consistency
c. Materiality