What are the underlying characteristics which support relevance and faithful representation?

Note by oliverstevenwarr, updated more than 1 year ago
Created by oliverstevenwarr almost 5 years ago


Characteristics of financial statements

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Comparability Information about a reporting entity is more useful if it can be compared with a similar information about other entities and with similar information about the same entity for another period or another date. Comparability enables users to identify and understand similarities in, and differences among, items. Verifiability Verifiability helps to assure users that information represents faithfully the economic phenomena it purports to represent. Verifiability means that different knowledgeable and independent observers could reach consensus, although not necessarily complete agreement, that a particular depiction is a faithful representation Timeliness Timeliness means that information is available to decision-makers in time to be capable of influencing their decisions. Understandability Classifying, characterising and presenting information clearly and concisely makes it understandable. While some phenomena are inherently complex and cannot be made easy to understand, to exclude such information would make financial reports incomplete and potentially misleading. Financial reports are prepared for users who have a reasonable knowledge of business and economic activities and who review and analyse the information with diligence.

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