Characteristics of Financial Statements

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Characteristics of Financial Statements

Financial Statement is inseparable from Accounting. The financial statements are very important to describe the condition of the company. Characteristics of financial statements that must be :

The first is easy to understand (understandability).

This means that the essential qualities are accommodated in the financial statements must be understood by the user. For this purpose, the user is assumed to have adequate knowledge of economic activity and business, accounting, and a willingness to study with reasonable diligence.

Relevant (relevance).

Relevant information must be presented in these financial statements, in accordance with the actions to be performed by users. Or in other words, the ability of the relevant information is to influence the decisions of managers or other users of financial statements so that the existence of information can change or support their expectations about the results or consequences of the decision.

Reliability (reliability).

Reliability is the quality of the information in financial statements that caused users of accounting information is highly dependent on the accuracy of the information generated. Reliability of the information depends on the ability of an information fair to describe the situation / event in accordance with actual conditions.

The last is to be compared (comparability).

A financial statement can be compared to each other when the information is well comparable between periods and among companies. The financial statements have an important role for many parties, so that the timeliness of financial reporting is needed. (Baridwan) 

Healthy | Smart | Rich, at: 3/13/2012

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