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The principles of useful prospective financial information are as follows:
Relevance: The information provided should be relevant to the intended users and their decision-making needs. It should provide insights into the future financial performance of the entity and its ability to generate cash flows.
Reliability: The information provided should be reliable and free from bias. It should be based on reasonable and supportable assumptions and reflect the best estimates of future events and conditions.
Completeness: The information provided should be complete and cover all relevant aspects of the entity's financial performance and position. It should provide a comprehensive view of the entity's future prospects.
Comparability: The information provided should be comparable over time and across different entities. This requires the use of consistent and standardized methods and assumptions.
Understandability: The information provided should be presented in a clear and concise manner that is easily understood by the intended users. It should use plain language and avoid technical jargon.
Timeliness: The information provided should be timely and available when needed by the intended users. This requires the preparation and presentation of the information in a timely manner.
Overall, the principles of useful prospective financial information are designed to ensure that the information provided is relevant, reliable, complete, comparable, understandable, and timely. This information can be critical to the decision-making process of investors, creditors, and other stakeholders who rely on accurate and meaningful financial information to make informed decisions.
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