Qualitative accounting objectives
| Qualitative accounting objective | Description |
|---|---|
| Fundamental | |
| Relevance | Information needs to be relevant to the decisions users are making. Information influences decisions if it can be used to predict future outcomes or to confirm prior evaluations |
| Faithful representation | The information must represent the substance of the presented matter, not just the form. To do this, the information should be complete, neutral and error-free |
| Materiality | Information is material if ignoring it or misstating it could affect decisions |
| Enhancing | |
| Comparability | Accounting information needs to be comparable and enable users to identify the similarities and differences in information. Consistency helps to achieve this goal |
| Verifiability | The information needs to be verified in some way, either by direct observation or by recalculating the outputs using the known inputs and methods used |
| Timeliness | Information needs to be available to users in time to make the required decisions |
| Understandability | Information needs to be presented and classified clearly and concisely |
| Pervasive (authors’ classification) | |
| Cost vs benefit (cost-saving) | The cost constraint of useful financial information, as opposed to the benefits to the user |
| Qualitative accounting objective | Description |
|---|---|
| Relevance | Information needs to be relevant to the decisions users are making. Information influences decisions if it can be used to predict future outcomes or to confirm prior evaluations |
| Faithful representation | The information must represent the substance of the presented matter, not just the form. To do this, the information should be complete, neutral and error-free |
| Materiality | Information is material if ignoring it or misstating it could affect decisions |
| Comparability | Accounting information needs to be comparable and enable users to identify the similarities and differences in information. Consistency helps to achieve this goal |
| Verifiability | The information needs to be verified in some way, either by direct observation or by recalculating the outputs using the known inputs and methods used |
| Timeliness | Information needs to be available to users in time to make the required decisions |
| Understandability | Information needs to be presented and classified clearly and concisely |
| Cost vs benefit (cost-saving) | The cost constraint of useful financial information, as opposed to the benefits to the user |