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The Qualitative Characteristics of Relevance and Reliability - Essay Example

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Relevance and Reliability Your Name Due Date List of Contents Introduction………………………………………………………3 Theory…………………………………………………………….4 Practice……………………………………………………………8 The Application of Theory to Practice…………………………….11 Recommendations………………………………………………14 References……………………………………………………….17 Introduction Financial reporting is a legal requirement of a company…

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The Qualitative Characteristics of Relevance and Reliability

IASB has set standards for financial reporting which ensure that the reporting is done according to the set principles by all the companies. This helps the users of financial statements in making crucial economic decisions as there is no ambiguity due to different accounting styles. The standards ensure that a company provides all the relevant information that influences the financial needs of the users. There are specific areas that are not allowed to be left untouched. There is a possibility that some users require non-financial information about a company which is not available in its financial statements. There are a variety of users and their requirements are also different. Financial statements may be used by the employees of a company to know about their chances of obtaining a bonus. A cash flow statement of the year describes the liquidity of the company. Comparisons of statements of affairs of a year with those of preceding years help in evaluating the performance of the company. ...
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