What are the characteristics of information that affect qual

What are the characteristics of information that affect quality? What are examples of each?

Solution

Informations that affect quality (either poistively or negatively) have the following inherent characteristics - (i) bias - it has a negative effect (ii) accuracy - it has a positive effect (iii) precision - it has a positive effect.

Examples of bias would be inflating the sales figure by not deducting the sales returns amount or not accounting for allowance for sales return. This affects the quality of the income statement.

Examples of accuracy would be absence of any errors in the information in the form of factual errors or some mistakes like spelling mistakes.

Examples of precision would be exactly counting all physical inventory for the purpose of internal audit.