Qualitative Characteristics and Limitations of Decisions Useful Financial Reporting Information Accounting Essay
This chapter describes the qualitative characteristics of useful financial information. The qualitative characteristics can be categorized as fundamental relevance and faithful representation or as improving comparability, verifiability, timeliness and understandability, based on how they affect the usefulness of financial matters. Now one final point about the qualitative features of the Conceptual Framework. In every business decision there is a decisive trade-off between cost and quality. This is formalized in the Conceptual Framework as the cost constraint. The cost of reporting better quality financial information must be justified by the additional costs. Research into qualitative characteristics of financial information. The qualitative characteristics refer to the characteristics that make financial information useful for decision making. The six most important qualitative characteristics are: Relevance - Information is relevant if it can influence decisions by helping users predict the future,