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Qualitative characteristics are the attributes that make the information provided in financial statements more useful to users.The major qualitative characteristics are:
i) Understand-ability
An essential quality of the information provided in financial statements is that it’s readily understandable by users. For this purpose, users are assume d to have reasonable knowledge of business and economic activities and accounting and a willingness to study information with reasonable diligence.however, information should not be excluded merely on the ground that its too difficult for certain users to understand.
ii) Relevance
To be useful, information must be relevant to the decision making needs of users. Information has the quality of relevance when it influences the economic decisions of users by helping them evaluate past, present or future events or confirming, or correcting, their past evaluations.
iii) Materiality
The relevance of information is affected by its nature and materiality. In some cases, the nature of information alone is sufficient to determine its relevance. For example, the reporting of a new segment may affect the assessment of the risks and opportunities facing the entity irrespective of materiality of the results achieved by the new segment in the reporting period. Information is material if its omission or misstatement could influence the economic decisions of users taken on the basis of the financial statements.
iv) Reliability
To be useful information has to be reliable. Information has the quality of reliability when it is free from material error and bias and can be depended upon by users to represent faithfully that which it either purports to represent or could reasonably be expected to represent.
v) Comparability.
Users must be able to compare the financial statements of an entity through time in order to identify trends in its financial position and performance. Users must also be able to compare the financial statements of different entities in order to evaluate their relative financial position, performance and changes in financial position.
vi) Faithful representation
To be reliable, information must represent faithfully the transaction and other events it either purports to represent or could reasonably be expected to represent. Thus, for example, a balance sheet should represent faithfully the transactions and other events that result in assets, liabilities and equity of the entity at the reporting date which meet the recognition
criteria.
Wilfykil answered the question on February 8, 2019 at 07:06
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Date posted: February 8, 2019. Answers (1)
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Date posted: February 8, 2019. Answers (1)
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Date posted: February 8, 2019. Answers (1)
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Date posted: February 8, 2019. Answers (1)
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Date posted: February 8, 2019. Answers (1)
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Date posted: February 8, 2019. Answers (1)
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Equip Agencies Ltd. purchased an equipment for Sh.4,000,000 on 1 July 2008. Depreciation on equipment is provided on a straight line basis at the rate of 25% per annum.
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Date posted: February 8, 2019. Answers (1)
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Equip Agencies Ltd. purchased an equipment for Sh.4,000,000 on 1 July 2008. Depreciation on equipment is provided on a straight line basis at the rate of 25% per annum.
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Date posted: February 8, 2019. Answers (1)