Qualitative Aspect of Financial Staments

The following are the important qualitative aspect of financial statements

1.Reliable

 Financial statement must be reliable . The reliability is important factor because financial statements are used by many stakeholder for the decision making purposes. The entity conduct external audit to improve the reliability of the financial statement. The reliable financial statement means that it can be trusted for decision making.

2.Relevance

The financial statements must project the relevant information only. The relevant information mean the information which reflects the financial position and performance of the entity.The quality financial statement provides only relevant information .

3.Understand ability

The financial statements must be understandable by the user. The understand ability concept takes into account the fact that user has reasonable knowledge of business and accounting.

4.Completeness

The financial statements must be complete in all aspect. The incomplete information is of no use and the financial statement is a major source for decision making. The complete financial statement means that financial statement reflects all the transaction entered into by the organization.

5.Timely

The financial statements must be presented within reasonable time to user. it must not take too much time to publish the financial statement after the year end. The delayed financial statement not only of no use but also create doubt about the reliability.