Relevance 2. Definitely entity cannot do anything about users and its upon the user to have at basic level of understanding about financial statements. The information must be readily understandable to users of the financial statements. Through relevant information users can evaluate whether they are moving along the right path i.e. What is the objective of Financial Statements? Qualitative characteristics of accounting information that must be present for information to be useful in making decisions: 1. Relevance and faithful rep­re­sen­ta­tion are the fun­da­men­tal qual­i­ta­tive char­ac­ter­is­tics of useful financial in­for­ma­tion. Those characteristics should be maximised both individually and in combination. How we achieve the quality information? The information must be readily understandable to users of the financial statements. This includes financial position, financial performance, and changes in financial position. Information is considered relevant which adds value to the decision making process by providing the required bits and pieces of past, preset and future times. However, comparability does not require that one stays uniform even if there are other ways to make financial statements even more reliable and relevant. These personal judgment decisions of the accountant will be reflected in the financial statements. The usefulness is described in the form of the qualitative characteristics of the financial statements. IASB Framework for Presentation and Preparation of Financial Statements states FOUR principal characteristics as follows: Users cannot use such financial information that they cannot understand. Definitely entity cannot do anything about users and its upon the user to have at basic level of understanding about financial statements. Meaning, it should show what really are present and what really happened, as the case may be. Enhancing qualitative characteristics of Financial Statements should be maximized by the entity to the extent necessary. Accounting relevance deals with the usefulness of financial information to users during the decision making process. Same way, past information given in financial statements help us in predicting the financial position and financial performance of the company in upcoming financial periods. Users cannot evaluate different aspects of entity’s financial position and financial performance if they are unable to compare the financial information of one period with another or financial information of one entity with another entity’s financial information. Also with proper explanation financial statements can be made more understandable. Academia.edu uses cookies to personalize content, tailor ads and improve the user experience. By using our site, you agree to our collection of information through the use of cookies. So, even past information can be relevant. My video lectures about qualitative characteristics of conceptual framework such as completeness, comparability, consistency and verification are covered in my financial accounting, intermediate accounting and CPA lessons. Actually there are four qualitative characteristics of financial statements. free from errors, especially material errors. Financial statements should not be described as compliant with IFRSs unless they comply with all of the International Financial Reporting Standards. Qualitative Characteristics of financial statements include: Relevance: The accounting information provided is useful to stakeholders. You have entered an incorrect email address! Their economic decisions personalize content, tailor ads and improve the user to have at basic level of understanding financial... Quantitative statements, based on numbers its upon the user to have certain qualitative of. 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