Page 90 - F1 Integrated Workbook STUDENT 2018
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Chapter 5
3.4 Comparability
Users must be able to compare financial statements over a period of time in order to
identify trends in financial position and performance. Users must also be able to
compare financial statements of different entities to be able to assess their relative
financial position and performance.
3.5 Verifiability
Verification can be direct or indirect. Direct verification means verifying an amount or
other representation through direct observation i.e. counting cash. Indirect verification
means checking the inputs to a model, formula or other technique and recalculating
the outputs using the same methodology i.e. recalculating inventory amounts using
the same cost flow assumption such as first-in, first-out method.
3.6 Timeliness
Timeliness means having information available to decision makers in time to be
capable of influencing their decisions. Generally, the older the information is the less
useful it becomes.
3.7 Understandability
Information needs to be readily understandable by users. Information that may be
relevant to decision making should not be excluded on the grounds that it may be too
difficult for certain users to understand.
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