Define: Understandability

UK Accounting Glossary

Definition: Understandability


Quick Summary of Understandability


Qualitative characteristic of financial statements, understandable by users.



What is the dictionary definition of Understandability?

Dictionary Definition


The property of being understandable.
The quality of comprehensible language or thought.


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Full Definition of Understandability


Understandability is the principle that the financial information provided by a company should be such that its significance is capable of being perceived by a person with a reasonable knowledge of accounting and business and a willingness to study it with reasonable diligence.

The information provided should not leave out anything material, but should also not be so comprehensive in nature that it obscures any main points of significance.

This concept is defined in S.2 of the Financial Reporting Standard Applicable in the UK and Republic of Ireland.

The concept is also recognised in the International Accounting Standards Board’s (IASB) Conceptual Framework for Financial Reporting.


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Synonyms For Understandability


comprehensibility, intelligibility, clarity, interpretability, readability


Cite Term


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Page URL
https://payrollheaven.com/define/understandability/
Modern Language Association (MLA):
Understandability. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. February 26, 2020 https://payrollheaven.com/define/understandability/.
Chicago Manual of Style (CMS):
Understandability. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/understandability/ (accessed: February 26, 2020).
American Psychological Association (APA):
Understandability. PayrollHeaven.com. Retrieved February 26, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/understandability/

Definition Sources


Definitions for Understandability are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • BusinessDictionary.com
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 23rd December 2018.