Explain with relevant examples the following qualitative characteristics of financial information as it relates to general purpose financial statements:
Relevance; Reliability; Comparability; and Understandability.
When an organization produces relevant financial statements, that organization is ensuring that the material contained in the financial statements is relevant to the financial statement users. Questions that can be addressed in evaluating the relevance of a company's financial statements include, "is the information contained in the financial statements relevant to the company's mission and objectives? Are the disclosures being made in the financial statements relevant to the information released, and if not, why aren't relevant disclosures being made?" A company may choose to disclose relevant information in the financial statement, but may not disclose the reasons, in footnotes, for the relevant transactions.
The company's financial ...
This solution discusses the importance of relevance, reliability, comparability and understandability in 446 words.