The conceptual framework provides an underlying foundation for the development of accounting standards and interpretation of accounting information.

To be useful for decision making, accounting information should have relevance $($confirmatory value, predictive value, and materiality$)$ and faithful representation $($completeness$,$ neutrality, and free from error$).$

Four characteristics of financial reporting enhance its usefulness. These characteristics include comparability, verifiability, timeliness, and understandability.

Knowledge Check $01$

Match the term and the definition.