What
are qualitative factors of financial statement?
The quality of financial
statement information is determined by the four factor i.e. understandability,
relevance, comparability and reliability of information is being furnished by
the financial statement.
What
is understandability of financial statement?
The financial statement
should be presented in a way that it can be readily understandable by the user.
In this context user are assumed to have necessary business and economic
knowledge. The information shall not be excluded from the financial statement
on the ground that it is difficult to understand.
What
is reliability of financial statements?
Financial statement should
present reliable and information that can be entrusted. Therefore Financial statements
information must free from error, accurate, complete, and neutral. Financial statement meets the decision making
requirement of many user, therefore, reliability a fundamental qualitative
requirement of financial statement.
What
is comparability of financial statements information?
The information of financial
statement must be comparable with other period information and financial statement
of the industry .Comparability is important aspect because it helps in determining
the trend over the period of time and evaluating the performance of the entity.
How
comparability in financial statement can be achieved?
Comparability in financial
statement can be achieved by consistent presentation of financial information
and presenting the corresponding figures i.e. last year figures.
