All accounting information produced by businesses should have some key qualitative characteristics.
The following are qualitative characteristics of good accounting information;
Relevance: accounting information is relevant if it has the ability to influence the economic decisions of users and is provided in time to influence those decisions. Information that is relevant has both predictive value and confirmatory values. Relevancy implies the following;
- appropriateness and suitability to user objective
Reliability: accounting information is reliable if it is free from material errors, it is complete and faithfully represents what it purports to represent. Reliability implies reasonable accuracy.
Understandability: Users of accounting information need to be able to perceive the significance and implication of information. The information must be understandable before it is useful.
Comparability: accounting information should permit meaningful comparison between one period and as well between one enterprise and another. The principle of comparability requires that a consistent method is applied over time. It also requires material disclosure of material information.