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Explain qualitative characteristics of accounting information

1.reliability

2relevance

what type of information is required by iong term lenders.

what is creditworthiness

how is accounting influenced by personel judgement

.1ghyansham is a furniture dealer .which of the following is not recorded in his bookk $what is the reason

a.purchase of timber for rs10000

b.sofa set worth rs20000 taken to his home

c.sale of household furniture for rs2000

d.dining table of rs15000 given to his friend as gift

1.1 which f the following tranaction is of a financial character& will be recorde in the business

a.goods taken from the business by the propieter for her personel use

b.interviewing the candidate for employment

c.sale of household furniture rs5000

d.receved an order for sales of goods

2.confidence $ trust that the reported information is a reasonable representation of the actual items and events ,that have ocurred, depicts which qualitative characteristic of accounting information

a.reliability

b.relevance

c.understandability

d.comparability

Asked by Udiksha Singh(student), on 27/7/12

Answers

EXPERT ANSWER
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What type of information is required by long term lenders.

 

Accounting information required by the long term lenders are repaying capacity of the business, profitability, liquidity, operational efficiency, potential growth of business, etc.

 

How is accounting influenced by personal judgment

 

Personal value judgments play an important role in deciding the nature of the financial statements. Different judgments are attached to different practices of recording transactions in the financial statements. For example, recording stock either at market value or at the cost requires value judgment. Similarly, provision on various assets, method of charging depreciation, period related to writing off intangible assets depends on personal judgment. Thus, personal judgments determine the nature of the financial statements to a great extent.

 

Ghyansham is a furniture dealer .which of the following is not recorded in his books & what is the reason

 

Sale of household furniture for Rs 2000 is not concerned or related to the business, therefore, it is not recorded in his books.

 

Confidence & trust that the reported information is a reasonable representation of the actual items and events ,that have occurred, depicts which qualitative characteristic of accounting information

 

Reliability- It confirms the confidence and trust in accounting information. Reliability also implies that accounting information should be free from all errors and defects and must be complete in all respects.

 

Due to paucity of time, we have presently solved four of your questions, as we require to cater the needs of other students like you. 

 

Posted by Komal Verma(MeritNation Expert), on 31/7/12

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