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ASB Statement of principles: Chapter Three - The qualitative characteristics of financial information. Users who make economic decisions based on financial statements need these financial statements to provide information which is useful to them. To make sure that financial statements provide useful information to users, the ASB's statement of principles chapter three which is titled the qualitative characteristics of financial information sets out the desirable characteristics of financial information. In chapter three the ASB set out five main qualities that are required of financial. The first one is materiality, which is threshold quality, its purpose is to make sure that any information that is given dosen't impair the usefulness of the other information given. The other four qualities relevance, reliability, comparability and understandability. We shall now look at each qualitative characteristics in turn. The first characteristic of information is relevance. The definition of relevance is as follows: Information is relevent if it has...

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