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Discuss the qualitative characteristics of useful financial information

  1. Discuss the qualitative characteristics of useful financial information

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Expert Solution

Qualitative characteristics of useful financial informations are as follows-

A. Relevance- financial informations provided must be relevant in nature and they should be associated with the decision-making process and they are material in nature so they could be used by various prospective investors and other stakeholders in making various decisions related to the company

B. Understandability- financial information should be understandable in nature and financial information should provide for easier understandability because they should not be providing for complex informations as most of the users of these financial informations are normal persons who are not associated with finance.

C. Timeliness- financial information must be provided for a specified period of time and the specified period of time should be relevant period of time as it will help the stakeholders in making various decisions.

D. Comparibility- Another qualitative character of financial information is that they should be comparable in nature and they can be compared with one another in order to arrive at various conclusions so they are comparable with other financial informations of same nature or different nature.

E. Reliability- financial information should be reliable is nature and they should provide for various decisions which are based upon the true and fair informations and they should not be misleading the users of financial informations.

jeff jeffy answered 2 years ago
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