The objective of financial reporting essentially focus on providing persons with reasonable knowledge that is useful in making business and economic decisions.


The Objective provide information useful in:

1. investment and credit decisions.

2. assessing future cash flow prospects.

3. assessing an enterprise's resources, the debt and equity.


The Hierarchy of Accounting Qualities

1. Constraints: Benefits and Costs (pervasive)
Materislity (Threshold for Recognition)

2. User-Specific Quality: Understandability
Decision Usefulness

3. Primary Qualities:
A) Relevence: Perdictive value, Feekback value, Timeliness
B) Reliability: Neutrality, Representational Faithfulness, Verfiability

4. Secondary Qualities:
A) Comparability
B) Consistency