Accountants' Handbook, Volume One, Financial Accounting and General Topics, 12th Edition

(ii) Qualitative Characteristics of Accounting Information

“The objectives of financial reporting underlie judgments about the qualities of financial information, for only when those objectives have been established can a start be made on defining the characteristics of the information needed to attain them” (Concepts Statement No. 2, paragraph 21). Having concluded in Concepts Statement No. 1 that to provide information useful for making investment, credit, and similar decisions is the primary objective of financial reporting, the FASB elaborated on the corollary to that objective in Concepts Statement No. 2: that the usefulness of financial information for decision making should be the primary quality to be sought in determining what to encompass in financial reporting. The qualities that make accounting information useful have been designated its “qualitative characteristics.” The term was originally used by the Trueblood Study Group, but the idea of articulating the qualities of information that contribute to its usefulness in decision making has its genesis in the authoritative literature in APB Statement No. 4. That Statement described them as “qualitative objectives,” which “aid in determining which resources and obligations and changes should be measured and reported and how they should be measured and reported to make the information most useful” (paragraph 84).

Both APB Statement No. 4 and the Trueblood Report are direct antecedents of the FASB Concepts Statements because ...