The Conceptual Framework for Financial Reporting sets and discusses the objective and fundamentals that serve as the basis for developing financial accounting and reporting standards in different countries. The fundamentals are the underlying concepts of financial accounting that guide the selection of transactions, events, and circumstances to be accounted for; their recognition and measurement; and the means of summarizing and communicating them to interested parties. The objective identifies the purpose of financial reporting.

Question 1:

What is the most important quality for accounting information as identified in the Conceptual Framework? Explain why it is the most important