The prepared accounts should also be comparable across the various years, allowing the users to judge the trend a company’s fortunes have been taking and make decisions. This carries the implication of companies having to mention the policies adopted in different years and changes in these policies if any. This does not imply that the financial statements should be uniform. It simply means that users should be able to look at the accounts of different years and be able to compare that information, without getting lost in terms of format or preparation. If they have to spend time interpreting what each change implies, the statements are not very useful for decision making.
Apart from this element of the financial statements being useful for decision making, they are also required to give a “true and fair” view of the financial standing of the company and its performance. This is briefly touched upon in the conceptual framework and dealt with more in depth in the accounting standards in place in Australia.
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