Professional Documents
Culture Documents
ACCOUNTING
ACCOUNTING
FINANCIAL INFORMATION
is contained and comuunicated through the financial statements.
o RELEVANCE
o An information is said to be relevant if it can assist a user in predicting a financial
situation or scenario (predictive value) and confirming predictions and forecasts
previously made (confirmatory value)
o FAITHFUL REPRESENTATION
o To be considered as faithfully representative, accounting information must be
complete, unbiased, and free from error.
COMPARABILITY
o An entity’s information can be said to be comparable if such information can be
compared to another entity. Ex. A company’s cash account can be compared to its
competitor company’s cash account.
VERIFIABILITY
o Means that different users can reach an agreement about the financial information.
It is all about consensus (agreement)
TIMELINESS
o It ensures that such information is available to the users when they need it.
Otherwise, the decisions might be misinformed.
UNDERSTANDIBILITY
o The information must be clearly and concisely scaled down in order to be
understandable. Complex yet relevant information.