Course Content
Financial Accounting 1 & 2
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Qualitative Characteristics

 

Companies have lots of information. What determines what information is disclosed for financial reporting? 

Generally, information that helps stakeholders make key decisions need to be disclosed. 

 

In order to make decisions, information must be relevant and properly represented. There are certain qualitative characteristics that the FASB uses to determine important information from trivial information. 

 

Relevant Information

Materiality: information, if released, that would affect the decision of its users. 

Confirmatory Value: information that helps confirm or correct the past. 

Predictive Value: information that helps users make predictions on the future.

 

Accurate Representation 

Error-free

Neutrality: information presented must be unbiased

Completeness: all the information necessary is disclosed and nothing of materiality is omitted

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