Characteristics of Accounting Information :
The various characteristics of accounting information are as follows:
(i) Relevance: The information should be relevant in order to influence the economic decisions of users by helping them to evaluate the events at all times. Accounting information has a bearing on decision making by helping investors, creditors and other users to evaluate past and future events. It confirms or corrects prior expectations. The relevance of information is affected by its nature and materiality.
(ii) Reliability: Reliability relates to the confidence in the accounting information in the sense that the information must faithfully represent what it intends to present; it must be factual. Information should be free from material errors and bias. The key aspects of reliability are faithful representation, substance over form, neutrality, prudence and completeness.
(iii) Comparability: Accounting information of an enterprise is useful when it is comparable with similar information for the same enterprise in other periods of time and similar information regarding other enterprises at the same time. Thus, the information should be presented in a consistent manner over time and consistent between entities to evolve users to make significant comparisons.
(iv) Understandability: Information should be readily understandable by users who are expected to have a reasonable knowledge of business, economics and accounting and a willingness to study the information with reasonable diligence.
(v) Timeliness: The more quickly the information is communicated or provided to the users, the more likely it is to influence their decisions. Hence, for prompt decision-making accounting information should be made available at appropriate time without delays.
(vi) Cost-benefit: The accounting information must be useful to most of the people who want to use it and preparation of that useful information must not be a costly and time consuming process. The emphasis is on cost-benefit consideration and the benefit derived from information should normally exceed the cost of providing it.
(vii) Verifiability: Verifiability ensures the truthfulness of the recorded transactions, which can be checked by persons other than the accountant himself.
(viii) Neutrality: Accounting information is neutral in the sense that it should be free from bias and it should not favour one group over another. Neutrality is significant especially for the external users of accounting information.
(ix) Completeness: Completeness means that all material information that is necessary to investors, creditors or other users for assessing the financial position and operating results of the organization has been disclosed in the financial statements.