What are the qualitative characteristics of the financial statements which improve the usefulness of the information furnished therein? Or What are…

Qualitative Characteristics of Financial Statements Understandability Information presented in financial statements should be readily understandable by the users with reasonable knowledge of business and economic activities. Relevance Financial statements should contain relevant information only. Information, which is likely to influence the economic decisions of the users is called relevant. Reliability Information must be reliable; that is to say, they must be free from material error and bias. Comparability Financial statements should provide both inter-firm and intra-firm comparison. Or Accounting Standards deal with the issues of (i) Recognition of events and transactions in the financial statements, (ii) Measurement of these transactions and events, (iii) Presentation of these transactions and events in the financial statements in a manner that is meaningful and understandable to the reader, and (iv) Disclosure requirements.