Effective Presentation 3. Sometimes budgeted figures are given along with the present figures. The financial statements should be presented in a simple and lucid way so as to make them easily understandable. They should therefore abide by a set of underlying assumptions and characteristics. Relevance 4. The following are all qualitative characteristics of financial statements : Understandability . Thank you very much sir, I didn’t do accounting in SHS but doing it in tertiary level.please I want to know the terms well. Timeliness is ranked sixth, ‘economic value assessment’ eight, and conservatism ninth. Attractive 5. This means that information must be clearly presented, with additional information supplied in the supporting foot Accounting For Management. The financial statements must be prepared in such a way that they are comparable with prior year financial statements. God bless.dani josh. Thanku,that was part of my course work question. Following are the main qualitative characteristics of financial statements: The financial statements are published to address the shareholders of the company. The directors must elaborate the information provided in the statements where necessary. Following are the main qualitative characteristics of financial statements: Understandability: The financial statements are published to address the shareholders of the company. Show your love for us by sharing our contents. This means that the information provided must not have any significant errors or material misstatements. Explanations, Exercises, Problems and Calculators, Accounting principles and concepts (explanations). According to the framework, qualitative characteristics are the attributes that make the information provided in financial statement useful to users. So it is important that these statements must be prepared in such a way that is easy to understand and interpret for the shareholders. Ideal Financial Statement Characteristic # 1. ADVERTISEMENTS: The following points highlight the nine characteristics of financial statements, i.e, 1. Analytical Representation 8. The information provided in these statements must be clear and legible. Fund Providing Institutions (Banks, Insurance Companies, Assets Funding Firms etc. The reader will be able to form an idea about the figures. Financial statements are quantitative statements, based on numbers. Effective Presentation 3. Thank you, If possible will you be able to share some examples for these qualitative characteristics, Copyright 2012 - 2020. The Indian Companies Act, 1956 has made it obligatory to give previous years figures in the balance sheet. Promptness. On a very delayed basis, financial statements become aimless and useless. Assumptions for financial statements: Accrual Basis, Going Concern. For the sake of understandability, the management must consider not only the statutory data and information but also the voluntary information disclosures which would make financial statements easier to understand. This is because the shareholders are the real owners of the company but the company is governed and administered by directors. The size of the statements should not be very large. The areas that are judgmental and subjective in nature must be presented with due care and keen competence. However, the information they provide to the users have some important qualitative characteristics. The balances of different ledger accounts should be easily taken to these statements. As directors act as stewards of shareholders, it is their duty to prepare financial statements that are free from material misstatements as well as also posses some qualitative characteristics which are important to enhance their quality and relevance. I really want to be an accountant, so I must know accounting and I want to understand accounting to my finger tips, Thanks for your efforts and time in preparing this. The information should be analyzed in such a way that similar data is presented at the same place. This will be helpful in analysis and interpretation of data. Content Guidelines 2. The information contained in the financial statements should be such that a true and correct idea is taken about the financial position of the concern. All the information in the financial statements must be provided within a relevant span of time. A relationship can be established in similar type of information. The calculation work should be minimum possible while preparing these statements. The results of financial analysis should be in a way that can be compared to the previous years statements. Copyright 10. The transactions shown must be based on the concepts of prudence and must represent the true nature of company’s transactions and operations. Promptness. This characteristic is maintained by adopting accounting policies and standards that are applied are consistent from period to period and between different jurisdictions. The disclosures must not be excessively late or delayed so that while making their economic decisions the users of these statements posses all the relevant and up-to-date knowledge. Financial statements should be useful to readers. There are mainly five types of financial statements; statement of financial position, income statement, statement of changes in equity, statement of cash flows and disclosure notes. Next, the 5 regulatory characteristics of these financial statements that will provide useful information to the users will also be defined in this … You really sound professional! Brief 9. Content Filtrations 6. 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