An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Tony van Zijl
Victoria University Of Wellington

Ann Tarca
University of Western Australia

Philip Brown
University of Western Australia

David Woodliff
University of Western Australia

Mike Bradbury
Unitec

Phil Hancock
University Of Western Australia

Abstract: The aim of this study is to investigate the decision usefulness of an alternative format for the income statement, called the matrix format, which has been developed as part of the International Accounting Standards Board’s performance reporting project. We conducted experiments involving participants in supervised (laboratory) and unsupervised settings. Subjects were required to complete a financial analysis exercise using a set of financial statements that included an income statement based on either the matrix format or on the current format as per IAS 1. We found business people with a reasonable knowledge of business and economic activities but limited formal accounting training could extract a range of decision-relevant information from the financial statements with greater accuracy, ease and confidence under the matrix format. The findings may assist standards setters in their evaluation of alternative formats of the income statement.

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