Which two characteristics are considered fundamental qualitative characteristics of financial information?

The correct answer highlights two fundamental qualitative characteristics of financial information: relevance and faithful representation.

Relevance refers to the capacity of financial information to influence the decisions of users by helping them evaluate past, present, or future events. This quality ensures that the information is timely and pertinent to the decision-making process. For instance, financial statements that include projected future revenues can help investors make informed decisions about investing in a company.

Faithful representation means that the financial information accurately reflects the economic phenomena it purports to represent. This characteristic encompasses completeness, neutrality, and freedom from error. It ensures that the data presented can be trusted by users to provide an accurate depiction of the company's financial health.

The other options present characteristics that are important but do not fall into the fundamental category. Comparability and consistency, for example, support the overall usefulness of financial information, allowing users to identify similarities and differences between entities over time. Transparency and disclosure, while critical for building trust and ensuring users have access to necessary information, are seen more as enhancing qualitative characteristics rather than fundamental ones. Therefore, relevance and faithful representation are prioritized as the essential traits that underlie effective financial reporting.