Evaluate and Examine the Four Qualitative Characteristics of Accounting Information

Accounting information must have reliability. “Accounting information is reliable to the extent that it is verifiable, is a faithful representation, and is reasonably free of error and bias” (Kieso et al., 2007). Information should be comparable with a similar company and also consistent with the same company through different periods.

Quality of reported financial information is a critical element in evaluating financial statement data. The higher the quality of financial reporting, the more useful the information is for business decision making.

As stated in the AASB Framework, financial statements play an utmost important role to a variety of users, which mainly consist of the investors, employees, lenders, suppliers and other trade creditors, customers, governments and their agencies, as well as the public, in making vital financial decisions. For accounting information to be ‘decision useful' to this groups of people, the financial information

As the business environment grows and companies find new ways to expand into their respective - or even new – markets, it is important that reporting standards stay up to date with changes and continue to assist companies in providing their users with useful accounting information. Information is labelled as being useful when it meets the

One of the most important factors is reliability of financial statements. Reliability is further ensured by audit of financial statements. At last but not least, financial statements should be made in a comparable format either with previous periods or with the competitors.

This accounting principle ensures comparability of any organization’s financial statements to any other organization in the same industry. Absence of this principle makes comparisons to other companies in the same industry difficult.

Representations are faithful if there is a correspondence or agreement between the accounting measures or descriptions in the financial reports and the economic phenomena they purport to represent (FASB, 1980: 6; FASB, 2005: 3). The difference between reliability and a faithful representation is ambiguous. Since the attributes neutrality, completeness and substance of economic phenomena (substance over form) can be classified as qualities of faithful representation, reliability becomes redundant. Consequently, a point of attention is to discuss what exactly the notions reliability and faithful representation mean and what they do not mean (FASB, 2005: 2-3).In both frameworks neutrality is defined as free from bias. 'To that end, the common conceptual framework should not include conservatism or prudence among the desirable qualitative characteristics of accounting information. However the framework should note the continuing need to be careful in the face of uncertainty' (FASB, 2005: 3).

The information reflected in the financial statements actually is expected to be of high quality and useful to support the quality decision-making of market stakeholders due to the far-reaching and very costly consequences. It is important in this context to properly identify and discuss the user needs and thereby we refer to the actual requirements of all information users amongst them the management, which uses the financial information to steer, regulate and co-ordinate the business.

Each user of the financial statements interprets the information in a different manor. They use the information to determine their interactions with the organization. Management, investors, and employees use the same information from the financial statements but for different purposes. These four basic statements are the fundamentals of accounting which can be much more detail and complex. They do not need to be more complex for the users of the information; these basic statements have all the information needed to make

Accounting is specifically “a system by which economic information is identified, recorded, summarized and reported for the use of decision makers”; however, accounting involves interpretation and analyzing of all financial information, including taxing, personal financial information and investment (Alba, Bathija, & Thonton, 2005). Accounting is defined as the language of business, in that it specifically records the financial data that is required for businesses to operate both efficiently and effectively. Modern accounting includes

A financial statement is a document in which the current situation of the user at the end of the fiscal year is known. The financial statements are important because they are serious and official recognition that allow a very organised idea finance documents. They help not only to see the past, but to learn from it to improve the following year. They also allow study of clear and effective way he was saved was spent and more. The financial statements reflect the financial position of company, financial performance and cash flows of the company, it is significant to note that the correct depiction of the impacts of transactions and other events and circumstances according to the explanations and criteria identification of assets, liabilities, income and expenses go in the same outline (Schroeder et al., 2011).

An ongoing concern in financial reporting is the usefulness and reliability of information provided by corporations. The financial accounting standard board defines usefulness as the information that is useful for the users in decision making (FASB, 2011). Reliability is inferred when the information is verified, objective, and can be relied on. Therefore, Statement of Financial Accounting Standards No. 157 standardizes the valuation and disclosure of fair value for assets and liabilities in order to achieve both usefulness and reliability. The reasoning for the hierarchy was due to the inconsistency in previous definitions and guidance (FASB, 1992).

The content of financial reports can be divided to accounting and non accounting information. According to Ahmed Belkaoui and Alain Cousineau (1977), accounting information is defined as quantitative, formal, structured, audited, numerical and past oriented material. While non accounting information is defined as qualitative, unaudited, narrative and it is future oriented prose. For accounting information, it can further categorized into 4 different categories:

This essay will begin to look at the main financial statements used by decision makers in businesses today. This essay will go into detail about the income statement and statement of financial position and whether these two statements provide decision makers with their financial information adequately. This essay will also include the various advantages and disadvantages of each financial statement as well as describing whom the decision makers are and why financial statements are important to them. A conclusion will be present at the end of this essay to demonstrate an overall view of whether financial statements are beneficial to decision makers.

FACTORS AFFECTING ACCOUNTING INFORMATION SYSTEMS SUCCESS IMPLEMENTATION (An Empirical Study on Central Java Small and Medium Company) THESIS ASHARI C4C005126 ACCOUNTING MASTER PROGRAM DIPONEGORO UNIVERSITY SEMARANG 2008 ABSTRACT Because of its important role in economics growth, small and medium business enterprises has to increase its capability and human resource in order to win the global competition with foreign economics institution. One technique that can be used to increase its ability and competitive power of small and medium business enterprises is by employing information technologies. With employing information technology, small and medium business enterprises can reduce its production cost and then