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  • Objectives in Selecting Accounting Policies (Qualitative Characteristics of Financial Statements)

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    The document discusses the importance of relevance, comparability, reliability, and understandability when selecting accounting policies and developing accounting standards. It notes that financial information should affect business decisions, reports should be comparable across periods and entities, information should be dependable and free of bias, and reports should be understandable. The document also states that developing standards improves comparability, narrows differences in practice, and enhances reliability and clarity of accounting data. Finally, it mentions that international standards offer common rules, improve international comparability, increase reliability, and make information more understandable globally.

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    Accounting Policies

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    The document discusses the importance of relevance, comparability, reliability, and understandability when selecting accounting policies and developing accounting standards. It notes that financial information should affect business decisions, reports should be comparable across periods and entities, information should be dependable and free of bias, and reports should be understandable. The document also states that developing standards improves comparability, narrows differences in practice, and enhances reliability and clarity of accounting data. Finally, it mentions that international standards offer common rules, improve international comparability, increase reliability, and make information more understandable globally.

    Copyright:

    Attribution Non-Commercial (BY-NC)
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    17 views7 pages

    Objectives in Selecting Accounting Policies (Qualitative Characteristics of Financial Statements)

    Uploaded by

    fuaadh
    The document discusses the importance of relevance, comparability, reliability, and understandability when selecting accounting policies and developing accounting standards. It notes that financial information should affect business decisions, reports should be comparable across periods and entities, information should be dependable and free of bias, and reports should be understandable. The document also states that developing standards improves comparability, narrows differences in practice, and enhances reliability and clarity of accounting data. Finally, it mentions that international standards offer common rules, improve international comparability, increase reliability, and make information more understandable globally.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPSX, PDF, TXT or read online from Scribd
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    of 7

    Objectives in selecting accounting policies (qualitative characteristics of financial statements)

    Relevance
    Financial information is relevant only if it affects the business decisions.

    Comparability
    A financial report can only be compared with reports for other periods if similarities and differences can be identified.

    Reliability
    Financial information is reliable only if it can be depended upon to represent actual events and is free from error and bias.

    Understandability
    A financial report must be capable of being understood by the users of that report.

    Reasons for developing accounting standards


    Improving comparability

    Narrowing the areas of difference and variety of accounting practice Improving reliability and understandability of accounting information

    Reasons for using International Accounting IASs provide a commonly understood Standards range of rules.
    This offers less opportunity for confusion. They improve comparability between financial statements internationally. Information is more reliable with fewer rules and practices to follow. Fewer rules make accounts more understandable to an international audience.

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