Question Tag: Information reliability

While managers can use different leadership styles, they all share the task of utilizing information to make decisions that achieve organizational goals. Accounting information for decision making will differ in terms of its details depending on the user.

Required:

Explain THREE qualities of Management Accounting information. (3 marks)

Answer:

The qualities of Management Accounting information include:

1. Relevance:
   Information should be timely and bear on the decision-making process by possessing predictive or confirmatory (feedback) value.
2. Faithful Representation:
   Information must be truthful, complete, neutral, and free from error.
3. Comparability:
   Even though different companies may use different accounting methods, there is still sufficient basis for valid comparison.

Additional points from the original answer but not required since only three qualities were asked:

• Consistency:
  Deviations in measured outcomes from period to period should be the result of deviations in underlying performance (not accounting quirks).
• Verifiability:
  Different knowledgeable and independent observers reach similar conclusions.
• Timeliness:
  Information should be available in sufficient time to be capable of influencing decisions.
• Understandability:
  Information should be clear and concise to those with reasonable business knowledge.