Alyssia Ferrell
September 1, 2020
ACCT 2321
Case 1-8
A friend asks you about whether GAAP requires companies to disclose forecasts of financial
variables to external users. She thinks that information could be very useful to investors.
Required:
1. What are the two primary qualitative characteristics of accounting information?
2. Does GAAP routinely require companies to disclose forecasts of financial variables to
external users? Indicate yes or no and explain how your answer relates to the qualitative
characteristics of accounting information.
Solution:
1. Relevance and Reliability
2. No, because forecast is not required by GAAP. The two primary qualitative
characteristics, relevance and reliability, are not compatible with data projection. The
forecast has projections. Therefore, it does not fulfill financially and will be difficult to
verify the information.