Which of the Following Qualitative Characteristic of Useful Accounting Information

question 34

Multiple Choice

Which of the following qualitative characteristic of useful accounting information implies that only items that meet or exceed certain thresholds will affect decisions?

• A) Conservatism
• B) Materiality
• C) Relevance
• D) Comparability

---

Definitions:

Claim Dilution

The reduction in the likelihood of recovery or the value of each creditor’s claim as a result of an increase in the number of claimants or claims against the same debtor or asset.

Secured Loan

A loan that is backed by collateral, providing the lender with assurance that the loan will be repaid.

Unsecured Loan

A loan given without requiring collateral from the borrower.

Underinvestment

The situation where a company or individual invests less than is optimal, potentially leading to lower returns or growth than possible.