UK Accounting Glossary
Qualitative characteristic of financial statements, understandable by users.
Understandability is the principle that the financial information provided by a company should be such that it’s 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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This glossary post was last updated: 23rd December 2018.