Attributes(Characteristics) of accounting

Accounting is the art of recording, classifying and summarising in terms of money transactions and events of a financial character and interpreting the results thereof. The attributes of accounting are as follows:-

1. Relevance:- Relevance is closely and directly related to the concept of useful information. Relevance implies that all those items of information should be reported that may aid the users in making decisions and/or predictions. In general, information that is given greater weight in decision-making is more relevant.
2. Reliability:- Reliability is described as one, of the two primary qualities (relevance and reliability) that make accounting information useful for decision-making. Reliable information is required to form judgements about the earning potential and financial position of a business firm. Reliability differs from item to item. Some items of information presented in an annual report may be more reliable than others. For example, information regarding plant and machinery may be less reliable than certain information about current assets because of differences in uncertainty of realisation. Reliability is that quality which permits users of data to depend upon it with confidence as representative of what it purports to represent.
3. Understandability:- Understandability is the quality of information that enables users to perceive its significance. The benefits of information may be increased by making it more understandable and hence useful to a wider circle of users. Presenting information which can be understood only by sophisticated users and not by others, creates a bias which is inconsistent with the standard of adequate disclosure. Presentation of information should not only facilitate understanding but also avoid wrong interpretation of financial statements. Thus, understandable financial accounting information presents data that can be understood by users of the information and is expressed in a, form and with terminology adopted to the user’s range of understanding.