Answer
(1). Relevance: Relevancy is the capacity to influence decisions that users make based on financial reports.
(2). Faithful representation: The figures and corresponding explanations should accurately depict what occurred.
(3) Understandability: Users should comprehend the significance of the financial information they are provided with. The classification, presentation (clear and concise) and characterization of information contributes to understandability
(4) Comparability: The measurement and reporting of activities should be the same across companies to compare them.
(5) Consistency: Applying invariable accounting treatment when recording or reporting transactions from one financial period to the next. Changes in accounting methodologies should be justifiable and explained.
Work Step by Step
(1). Relevance: Relevancy is the capacity to influence decisions that users make based on financial reports.
(2). Faithful representation: The figures and corresponding explanations should accurately depict what occurred.
(3) Understandability: Users should comprehend the significance of the financial information they are provided with. The classification, presentation (clear and concise) and characterization of information contributes to understandability
(4) Comparability: The measurement and reporting of activities should be the same across companies to compare them.
(5) Consistency: Applying invariable accounting treatment when recording or reporting transactions from one financial period to the next. Changes in accounting methodologies should be justifiable and explained.
