Qualitative Characteristics and Elements of Accounting

Information must be understandable to users who are mature and willing to study the information diligently.

• Understandability

• Reliability

• Relevance

• Verifiability

• Timeliness

This information must be relevant in that it influences the decisions of users. This influence occurs when information helps the reader to:

predict future income and cashflows confirm or correct previous predictions by feeding back actual results.

• Understandability

• Reliability

• Verifiability

• Relevance

• Timeliness

Information must be reliable to be useful. The information should be of a standard that can be relied on by external users.

• Understandability

• Reliability

• Verifiability

• Relevance

• Timeliness

Information must be timely if it is to be relevant. Financial statements should be published as soon as possible after year-end.

• Understandability

• Reliability

• Verifiability

• Relevance

• Timeliness

he information must be capable of being tested (i.e. falsified, or provable by observation).

• Understandability

• Reliability

• Verifiability

• Relevance

• Timeliness

Freedom from bias so as to ensure that there is no overstatement or understatement in favour of any particular group of users or individual users.

• Comparability

• Completeness

• Verifiability

• Neutrality

Accounting information from an entity should be comparable with those of other similar entities

• Comparability

• Completeness

• Consistency

• Verifiability

The same accounting methods and principles should be used from year to year in the preparation of financial statements.

• Verifiability

• Neutrality

• Completeness

• Consistency

Where financial statements show all aspects of the business.

• Consistency

• Completeness

• Verifiability

• Neutrality

Which of the following is not related to relevance?

• Predictive Value

• Feedback value

• Timeliness

• Verifiability