Reliability, Relevance, Understand-ability, Comparability in Accounting Information

Reliability

Accounting information should be reliable. It gives the user confidence and trust. It is reasonable representation of actual items or event that has occurred. Accounting information should be error-free and neutral; an accountant’s bias must not color his information.

Relevance

Accounting information must be relevant to the user. It is relevant if it needs of the user in decision making. Relevance is defined in the terms of the ability to affect a decision-maker’s course of action.

For information to be relevant, it must have some being on the decision being made. Relevant information should be capable of making difference in a decision by helping user of accounting information form predictions about the outcomes of past, present and future event.
                                          
Understand-ability
Understand-ability is the quality of accounting information that enables user to perceive its significant, i.e to understand the content and significance of accounting statements and reports. To have the characteristics of understand-ability, accounting information must be presented in a manger that users can understand, i.e it must be expressed in terminology that is understandable to the user.

It is necessary that user of the accounting information must attain a minimum level of competence in understanding the terminology user in accounting statements.

It is assumed that the users have a basic knowledge of business accounting, and they will spend some time and effort in studying the accounting statements. However, the accountant has a basic responsibility to describe business transactions clearly and concisely.

Comparability
Usefulness is enhanced in accounting information can be compared with similar information for the same organization at different times, and for different organizations at the same time. It enhances the value of accounting information.

Absoluteness of the accounting is not of much use, it is the comparability that lens itself to proper decision making.

To achieve comparability, consistency and disclosure of accounting policies are necessary.