Main Content
Lesson 1: Conceptual Framework
Hierarchy of Characteristics of Financial Accounting Information
What makes accounting information useful to external users? How can they trust that the information is based on some realistic view of the company, and not just on what the company wants the information to reflect? These are the questions that led FASB to produce SFAC No. 2. The chart below summarizes this concept, which ultimately defines just how reliable accounting information is. All financial standards must have elements of each of the values in the chart. It should be noted, though, that in some cases, it may be necessary to make trade-offs between some elements. Scroll over each element to learn more about it.