Business, Legal & 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.

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.

Synonyms For Understandability

comprehensibility, intelligibility, clarity, interpretability, readability

Cite Term

To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.

Page URL
Modern Language Association (MLA):
Understandability. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
March 01, 2024 https://payrollheaven.com/define/understandability/.
Chicago Manual of Style (CMS):
Understandability. PayrollHeaven.com. Payroll & Accounting Heaven Ltd.
https://payrollheaven.com/define/understandability/ (accessed: March 01, 2024).
American Psychological Association (APA):
Understandability. PayrollHeaven.com. Retrieved March 01, 2024
, 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)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 15th February, 2020 | 0 Views.