Enhancing Qualitative Characteristics Of Useful Financial Information

Comparability refers to the ability of the users to distinguish similarities and differences between two economic phenomena.

Enhancing qualitative characteristics of useful financial information. For financial information to be of any use to investors creditors and other stakeholders it must exhibit certain required and desired attributes. Two of the six qualitative characteristics are fundamental must have while the remaining four qualitative characteristics are enhancing nice to have. The following are all qualitative characteristics of financial statements. These attributes are called qualitative characteristics of useful financial information.

Relevance financial information is regarded as relevant if it is. This means that information must be clearly presented with additional information supplied in the supporting footnotes as needed to assist in clarification. Qualitative characteristics of accounting information that must be present for information to be useful in making decisions. In order for the financial statements to be useful to the stakeholders of a business they must embody certain qualitative characteristics.

The qualitative characteristics of financial information. Accoding to the conceptual framework financial information is useful when it is relevant and represents faithfully what it purports to represent. The information must be readily understandable to users of the financial statements. The enhancing qualitative characteristics of financial information distinguish more useful information from less useful information.

The fundamental qualitative characteristics. Objective of financial reporting and the capital markets the objective of general purpose financial reporting is to provide financial information about the reporting entity that is useful to existing and potential investors lenders and other creditors in making decision about providing. Enhancing qualitative characteristics are additional benefit added to the fundamental to enhance the decision usefulness of financial information. Fundamental primary qualitative characteristics.

These characteristics are categorised in two parts i e. What are the fundamental and enhancing qualitative characteristics of useful financial information. The usefulness of financial information is enhanced if it is comparable verifiable timely and understandable. Fundamental qualitative characteristics and enhancing qualitative attributes.

Comparability is the quality of information that enables users to identify similarities in and differences between two sets of economic phenomena. In order for the financial statements to be useful to the stakeholders of a business they must embody certain qualitative characteristics.