Have a look at Exhibit 11.1: why do you think there is such an emphasis on the
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Have a look at Exhibit 11.1: why do you think there is such an emphasis on the qualitative aspects of information in the Framework for the Preparation and Presentation of Financial Statements?
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Exhibit 11.1 The qualitative characteristics of accounting information WHAT MAKES ACCOUNTING INFORMATION USEFUL? Threshold quality Primary characteristic WHAT INFORMATION IS RELEVANT? Materiality (1) Information which influences decisions Predictive Confirmatory value (4) value (4) interrelated Relevance (2) Secondary characteristic RELEVANT INFORMATION Consistency Comparability Trade-offs Compliance with accounting standards Choice of aspect (5) more of one may mean less of another Disclosure, e.g. accounting policies and corresponding figures Balance between characteristics Substance (6) USEFUL INFORMATION Information which is free from error or bias Reliability (3) Information which is not material cannot be useful WHAT INFORMATION IS RELIABLE? Valid description and measurement (7) WHICH QUALITIES, IF LACKING, WOULD LIMIT THE USEFULNESS OF THE INFORMATION? WHAT LIMITS THE LEVELS OF RELEVANCE AND RELIABILITY? Timeliness Completeness (8) Neutrality (9) Prudence (10) RELIABLE INFORMATION Understandability Users' abilities Presentation Benefit Cost
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Related Book For
Frank Woods Business Accounting Volume 2
ISBN: 9781292085050
13th Edition
Authors: Frank Wood, Alan Sangster
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