I need help to explain - When reviewing a financial report, why should information be reliable, relevant, consistent, and comparable? In other words, why are these accounting characteristics important? What kinds of problems could be created if a financial report is not reliable, relevant, consistent, or comparable?
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The financial reports of a firm are the only verifiable communication between a firm and a potential lender-whether it is a bank, a shareholder, or a venture capitalist. As such, these reports should be reliable, relevant, consistent, and comparable.
In terms of reliability, if the report is full of errors and 'shady' accounting practices that hide the truth, they are relatively useless to the ends users. Perhaps the most important of the four characteristics, reliability is fundamental and, ...
The solution outlines why financial reports should be reliable, relevant, consistent, and comparable.