Accounting Information Criteria.

Abstract This article focuses on the concept of accounting that has widely gained acceptance as an information system. This somewhat subtle change in thinking appears to be affecting the development of accounting theory. A committee of the American Accounting Association recently focused attention on four essential characteristics of accounting information-relevance, verifiability, freedom from bias, and quantifiability. These four characteristics were labeled standards, and it was noted that they provide criteria for evaluating potential accounting information. The committee also recognized the need for, and sought to encourage, further research in various areas of accounting. In this article it is suggested that there exist numerous criteria which should be used in the selection of financial accounting information. Further, it is suggested that these criteria form a kind of hierarchy. Four levels of the hierarchy are identified. The most applicable criterion is called first-level criterion. Other criteria that are more restricted in scope are referred as second-level criterion. Those with restricted applicability are called third-level criteria. Fourth-level criteria serves the practical purpose of avoiding arguments about meanings of words that could be assigned to different levels.