all information provided must be traceable and verifiable with proper source documents . The areas that are judgmental and subjective in nature must be presented with due care and keen competence. These personal judgment decisions of the accountant will be reflected in the financial statements. Show your love for us by sharing our contents. Com Contents Principles The Qualitative Characteristics of Financial Information Explanation Relevance 3.1 - 3.6Reliability 3.7 - 3.20 Understandability. The above financial statements build-up by five key elements of financial statements. I really want to be an accountant, so I must know accounting and I want to understand accounting to my finger tips, Thanks for your efforts and time in preparing this. The transactions shown must be based on the concepts of prudence and must represent the true nature of company’s transactions and operations. Qualitative characteristics are either fundamental or enhancing, depending on how they affect the decision-usefulness of information. (IASB, 2008). Interesting to read cause it is further simplified. Financial statements are quantitative statements, based on numbers. The informational qualities, which has been accepted by FASB (USA) in its Concept No. These personal judgment decisions of the accountant will be reflected in the financial statements. For example, in Balance Sheet, there are three main elements contain on it such as Assets, Liabilities, and Equities. Reliability One of the most important among qualitative characteristics of accounting information is reliability of data, i.e. Qualitative research methods are used to obtain detailed answers to the questions. Impact of Social Media Reviews on Brands Perception So it is important that these statements must be prepared in such a way that is easy to understand and interpret for the shareholders. Also, the current and prospective investors use the financial statements as one of the major tools for deciding whether to grant loans or credit terms to the credit applicant. Qualitative Characteristics of Financial Statement. Qualitative characteristics are the attributes that make the information provided in financial statements useful to users. Example of Understandability – It should be possible for bankers, investors, employees, etc. Qualitative analysis uses subjective judgment based on "soft" or non-quantifiable data. In order for the financial statements to be useful to the stakeholders of a business they must embody certain qualitative characteristics. Assumptions for financial statements: Accrual Basis, Going Concern. Understandability The information must be readily understandable to users of the financial statements. For example timelines may affect reliability and the accountant has to use professional judgment for STRIKING a balance between the two characteristics. Financial statements will generally show a fair presentation when • They conform with accounting standards • They conform with the any relevant legal requirements • They have applied the qualitative characteristics from the Framework. Overall the above discussion with respect to the qualitative characteristics of the financial statements of the Origin Energy Ltd shows that company has ensured that the aspects related to the accounting standard for ensuring these characteristics in the financial statements is there. This is awesome, I like your explanations, they are vivid and simple to understand. Financial information that faithfully represents economic phenomena has three characteristics: - (VAS) in terms of accounting standards and qualitative characteristics between five Finnish entities’ and five Vietnamese firms’ financial statements. We can compare the ExxonMobil financial statements with that of BP if both are prepared in accordance with the same set of accounting standards, such as IFRS or US GAAP, etc. Financial statements should be prepared ill accordance with IFRS. Easiness 6. 2. For the sake of understandability, the management must consider not only the statutory data and information but also the voluntary information disclosures which would make financial statements easier to understand. There are mainly five types of financial statements; statement of financial position, income statement, statement of changes in equity, statement of cash flows and disclosure notes. QUALITATIVE CHARACTERISTICS Qualitative characteristics are the qualities or attributes that make financial accounting information useful to the users. Examples. Problems in understanding may arise due to user’s inabilities or because of the information itself. 18. this Statement is to identify those attributes (hereinafter "qualitative characteristics") that financial information should possess if it is to serve the specified objective. Enhancing qualitative characteristics provide additional benefit and usefulness in the financial reporting information. In this article, we review these assumptions and characteristics. Thank you very much sir, I didn’t do accounting in SHS but doing it in tertiary level.please I want to know the terms well. (Appendix A- IPSAS1) •The four principal qualitative characteristics are: –understandability, relevance, reliability, and comparability. The information must be comparable to the financial information presented for other accounting periods, so that users can identify trends in the performance and financial position of the reporting entity. The qualitative characteristics can be categorized as fundamental (relevance and faithful representation) or enhancing (comparability, verifiability, timeliness and understandability) based on how they influence the usefulness of financial information. This is because the shareholders are the real owners of the company but the company is governed and administered by directors. Qualitative research is scientific research used to collect non-numerical data through different qualitative research methods like observational methods, Face-to-Face interviews, case studies. Although this characteristic may take more resources but still it is a vital characteristic as delayed information makes any corrective reactions irrelevant. This characteristic is maintained by adopting accounting policies and standards that are applied are consistent from period to period and between different jurisdictions. The disclosures must not be excessively late or delayed so that while making their economic decisions the users of these statements posses all the relevant and up-to-date knowledge. Relevance. However, this essay seeks to discuss the qualitative characteristics of financial statement and showing the difference between enhancing qualitative characteristics and fundamental qualitative characteristics using the conceptual framework of 2010/14. ADVERTISEMENTS: The following points highlight the nine characteristics of financial statements, i.e, 1. The Qualitative Characteristics Of Accounting Information Accounting Essay. Depict True Financial Position 2. Although the main statutory recipients of these statements are ‘shareholders’, but there are many other stakeholders that rely on these statements during their decision making process e.g. qualitative characteristics, and other elements of financial reports. 4. In deciding which information to include in financial statements, the objective is to ensure that the information is useful to the users in making economic decisions. Neutrality. This means that information must be clearly presented, with additional information supplied in the supporting footnote This has been done in quite detail which is very useful for the investors. This chapter describes the qualitative characteristics of useful financial information. Analytical Representation 8. to understand financial information of the business. It is the responsibility of the management to have an optimum mix of all four important qualitative characteristics of financial statements Faithful presentation. That means that the average, uniformed person might not understand a set of financial statements. The following are all qualitative characteristics of financial statements. The objective was to demonstrate how the qualitative characteristics, as defined by the IASB can be operationalised. That is why the FASB created the qualitative characteristics of financial information. The following are all qualitative characteristics of financial statements . These qualities are outlined in Chapter 3 of the Conceptual Framework for Financial Reporting, approved by the International Accounting Standards Board (IASB). That is why the FASB created the qualitative characteristics of financial information. QUALITATIVE CHARACTERISTICS Qualitative characteristics are the qualities or attributes that make financial accounting information useful to the users. The conceptual framework sets out four qualitative characteristics of financial statements: Understandable: The users should be able to understand and appreciate the information. Influence of Fair Value on the Qualitative Characteristics and Decision Usefulness of Accounting Information ... leading users of financial statements to have to evaluate the representational faithfulness of information on fair value from a variety of sources. You really sound professional! The information provided in the financial statements must be reliable and true. I hail this. Qualitative analysis uses subjective judgment based on "soft" or non-quantifiable data. The information provided in the financial statements must be relevant to the needs of its users. The format of the financial statements … IFRS Qualitative Characteristics Of Financial Reporting : Financial statements are a structured representation of the financial positions and financial performance of an entity. SAC 3 "Qualitative Characteristics of Financial Information". The qualities or attributes that make financial accounting information that is why the FASB the. 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