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It is a goal of an accounting information system to provide information that is relevant, meaningful, reliable, useful, and current. To achieve this, the system is designed so that transactions are entered as they occur (either manually or electronically) and information is immediately available online for management.
"The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions." Financial statements should be understandable, relevant, reliable and comparable.
Management accounting information differs from financial accountancy information in several ways: . while shareholders, creditors, and public regulators use publicly reported financial accountancy, information, only managers within the organization use the normally confidential management accounting information
This principle provides information that is reliable (removing opportunity to provide subjective and potentially biased market values), but not very relevant. Thus there is a trend to use fair values. Most debts and securities are now reported at market values.
A relevant cost (also called avoidable cost or differential cost) [1] is a cost that differs between alternatives being considered. [2] In order for a cost to be a relevant cost it must be: Future
Information is said to be material if omitting it or misstating it could influence decisions that users make on the basis of an entity's financial statements. [5] Put differently, "materiality is an entity-specific aspect of relevance, based on the size, or magnitude, or both," of the items to which financial information relates.
Accounting constraints (also known as the constraints of accounting) are the practical limitations and guidelines that influence how financial statements are prepared and interpreted. These constraints acknowledge that ideal accounting practices may need to be adjusted due to factors like the availability of reliable information, the cost of ...
Financial accounting is the preparation of financial statements that can be consumed by the public and the relevant stakeholders. Financial information would be useful to users if such qualitative characteristics are present.