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Contribution of relevance and reliability on financial reporting. - Essay Example
Author : joshuahickle
Finance & Accounting
Pages 14 (3514 words)
Relevance and reliability are two qualitative characteristics of any information that distinguish more useful information from the inferior or less useful information. These two qualities are highly related to financial information reported and published by companies…
Main objective of accounting policy is to produce fair valued accounting information that is highly reliable and relevant to the purpose and objectives of financials statement. Financial statements are the most important components of annual report that all public limited companies publish each year for the stakeholders of the company. The financial statements need to be the fair and ethical representation of financial details of all activities performed by the companies. Financial information is responsible for financial decision making by the investors, creditors, suppliers etc. Most important is investment decision making by the investors. So, relevance and reliability need to be two most important characteristics of financial statements of any organizations. These determine the quality of financial reporting. Main objectives of financial statements are to provide fairly reported and audited financial information to the shareholders of the organizations. So, users of financial statements consider it as reliable and relevant sources for taking decision for any financial purposes like investment, credit, supply etc. So, being a highly responsible for financial decision making, financial statements need to be relevant and reliable. ...