Explain the qualitative characteristics of accounting …

The qualitative characteristics of accounting information are as follows:

1. Reliability : It means the accounting information must be reliable i.e., the users must be able to depend on the information. It must be factual and verifiable. A reliable information should be free from errors and bias.
   To ensure reliability, the information disclosed must be credible, verifiable by independent parties, must use the same method of measuring and be neutral and faithful.
2. Relevance : Accounting information presented by financial statements must be relevant to the decision making needs of the users. It means Unnecessary and irrelevant information should not be included. To be relevant, the information must be available on time, must help in prediction and feedback, and must influence the decisions of users.
3. Understandability : It implies that the information provided in the financial statements must be prepared in such a manner that it is understandable by the its users. Understandability implies that the accounting information provided to the decision-makers must be interpreted by them in the same sense as it was prepared and conveyed to them. This can be done by giving proper explanatory and working notes to explain the information.
4. Comparability : It means that the users should be able to compare the accounting information. To be comparable, accounting reports must belong to a common period and use common unit of measurement and format of reporting.