Essay: Qualitative Characteristics of Accounting Information

Sample Essay

The objective of financial accounting is to provide critical information to stakeholders of a company who can use this information to make useful, logical and informed decisions. The importance of accounting information has been repeatedly stressed not only by regulatory bodies and standard setters but also by practitioners of the accounting profession. The qualitative aspect of this information is quite significant as decisions based on superior quality information would be more useful than decisions based on information with poor quality (Tulsian 2006).

Accountants must ensure that the information they provide to the users is comprehensible and concise yet complete at the same time. There are certain characteristics which increase the quality of accounting information and make it more useful. These characteristics within the conceptual framework of accounting are referred to as qualitative characteristics. There are four primary qualities of accounting information on which the usefulness of this information is gauged. These qualities or qualitative characteristics are reliability, relevance, understandability and comparability (Lee, Nicholson, Colon and Whitman 1999).

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