Читать книгу Financial Accounting For Dummies - Maire Loughran - Страница 22

Reliability means you can depend on the information to steer you in the right direction. For example, the information must be free from material misstatements (meaning it doesn’t contain any serious or substantial mistakes). It also has to be reasonably free from bias, which means the information is neutral and not slanted to produce a rosier picture of how well the company is doing.

Here’s an example of how a company would create biased financial statements. Say that a company has a pending lawsuit that it knows will likely damage its reputation (and, therefore, its future performance). In the financial statements, the company does not include a note that mentions the lawsuit. The company is not being neutral in this situation; it is deliberately painting a rosier picture than actually exists. (See Chapter 15 for my explanation of the purpose of financial statement notes.)

Reliable information must be verifiable and have representational faithfulness. Here’s what I mean:

  A hallmark of verifiability is that an independent evaluation of the same information leads to the same conclusion as presented by the company. An accounting application of this concept could be an independent third party, such as an auditor, checking that the dollar amount shown on the balance sheet as accounts receivable (money owed to the company by customers) is indeed correct.

 Representational faithfulness means that if the company says it has gross receipts of $200,000 in the first quarter of 2021, it actually has receipts of $200,000 — not any other amount.