Accounting Information Characteristics

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Characteristics of Accounting Information
When financial reports are generated by professional accountants, certain expectations of the information should be met:
1. Accounting information to be reliable, verifiable, and objective.
2. Consistency in the accounting information.
3. Comparability in the accounting information.
Reliable, Verifiable, and Objective
Accounting information should be reliable, verifiable, and objective.
Reliability: Accounting information is reliable to the extent that it is verifiable, is a faithful representation, and is reasonably free of error and bias. Reliability is a necessity for individuals who have neither the time nor the expertise to evaluate the factual content of the information.
Verifiability is demonstrated
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In other words, companies shouldn 't bounce between accounting rules and treatments to manipulate profits or other financial statement elements. Accounting methods should be used consistently.
Accounting consistency applies to the quality of accounting information because it allows end users to understand and compare financial statements. Think of it this way. If a company changed accounting treatment for its accounts receivable every single year, it would be difficult to compare the prior years ' accounts receivable balances with the current year. Since each year follows a different rule or standard, each year wouldn 't be able to be compared. This means that both ratio analysis and trend analysis wouldn 't be available for investors and creditors to help gauge the company 's current performance.
Comparability is a quality of accounting information that addresses the usability of financial information. Information that is prepared using the same measurement techniques and reported in a similar fashion is considered comparable information because this information is similar and can be judged side by side other similar financial
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The implications of this assumption are profound. The historical cost principle would be of limited usefulness if eventual liquidation were assumed. Under a liquidation approach, for example, asset values are better stated at net realizable value (sales price less costs of disposal) than at acquisition cost. Depreciation and amortization policies are justifiable and appropriate only if we assume some permanence to the enterprise. If a liquidation approach were adopted, the current-noncurrent classification of assets and liabilities would lose much of its significance. Labeling anything a fixed or long-term asset would be difficult to justify. Indeed, listing liabilities on the basis of priority in liquidation would be
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