Characteristics) that financial information should possess if it is to serve the specified objective 4 the qualitative characteristics will provide assistance when choices. That explain the qualitative characteristics of accounting information and define the el- ements of financial statements these conceptual building block s form a bridge between. That is why the fasb created the qualitative characteristics of financial information these characteristics describe what useful information is and how it relates to financial decision-making these characteristics describe what useful information is and how it relates to financial decision-making. Qualitative characteristics are the tributes that make the information provided in financial statements useful to users accounting information that is reported to facilitate economic decisions should possess certain characteristics or normative standards.
Conceptual framework for financial reporting chapter 1, the objective of general purpose financial reporting, and chapter 3, qualitative characteristics of useful financial information. The four principal qualitative characteristics of useful financial statements are: - 888190. 1proposed conceptual framework for financial reporting: objective of financial reporting and qualitative characteristics of decision-useful financial reporting information (norwalk, conn: fasb, may 29, 2008), page ix.
4 understandability understandability requires financial information to be understandable or comprehensible to users with reasonable knowledge of business and economic activities to be understandable, information should be presented clearly and concisely. According to the fasb's statements of financial accounting concepts, conservatism is a desired qualitative characteristic of accounting information f equity is a residual amount representing the owner's interest in the assets of the business. Conceptual framework: objectives and qualitative characteristics what is the objective of the project to provide the best foundation for developing principle-based standards, the boards.
The qualitative characteristics of useful financial reporting identify the types of information are likely to be most useful to users in making decisions about the reporting entity on the basis of information in its financial report. By the above discussion we can observe one fact that all four principal characteristics are interrelated and higher level is achieved in one area at the expense of the other. The qualitative characteristic of 'relevance' and 'supportability' have been satisfied in more annual reports compared to that of 'balance' and 'comparability' keywords.
4 principal of qualitative characteristic understandability an essential quality of the information provided in financial statements is that it is readily understandable by users. The following are all qualitative characteristics of financial statements : understandability the information must be readily understandable to users of the financial statements. Qualitative characteristics of accounting information are those characteristics which contribute to the quality or value of the information the overriding qualitative characteristic of accounting. Comparability is the quality of accounting information about a business to be comparable with prior periods and with other companies in the industry, the country, the region or even the whole world.
Be2-4 identify which qualitative characteristic of accounting is best describe in each item below ( do not use relevance and faithful representation) a) the annual reports of best buy co are audited by certified public accountants. There are four principal qualitative characteristics of useful information a from busi 353 at university of british columbia. Qualitative characteristic being employed when companies in the same industry are using the same accounting principles comparability quality of information that confirms users' earlier expectations.
Accounting reliability refers to whether financial information can be verified and used consistently by investors and creditors with the same results basically, reliability refers to the trustworthiness of the financial statements. Qualitative characteristics of financial information financial information presented in financial statements needs to have some key qualities which make it useful for the users generally accepted accounting standards normally outline such standards in their frameworks. The fasb concepts statements are intended to serve the public interest by setting the objectives, qualitative characteristics, and other concepts that guide selection of economic phenomena to be recognized and measured for financial reporting and their display in financial statements or related means of communicating information to those who are interested.