Define understandability as an enhancing qualitative characteristic?

Understandability is an enhancing qualitative characteristic of financial information that refers to the clarity and comprehensibility of the information presented. This means that the information should be clear, concise, and easily understandable to users who have a reasonable knowledge of business and economic activities.

Having understandable financial information allows users to make informed decisions based on the information presented, leading to better decision-making and improved financial performance. It also helps to build trust and confidence in the information provided, as users can easily interpret and analyze the data.

Overall, understandability enhances the usefulness of financial information by ensuring that it is accessible and comprehensible to a wide range of users.