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Dear Sir
I want to understand the meaning of relevance ,reliability ,comparability and how they make the financial information useful?I could put all sorts of information into this reply of mine … for example, I could inform you that my home football team beat Oxford United last evening by a 3 – 0 scoreline whereas in the equivalent fixture last year Oxford United beat my team by a 2 – 3 scoreline
But is that information relevant? Almost certainly not
Is that information reliable? Can you put some faith in believing the truth of the 3 – 0 scoreline?
Well, in this case, yes you can
Is the same information comparable? Well, again, yes it is
But is any of this at all relevant to your interpretation of the contents of a set of financial statements?
Clearly not. So, anything that IS contained within a set of financial statements should be relevant, should be reliable and should be comparable if the financial information within those financial statements is to be considered useful
OK?
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