Intermediate Accounting 14th Edition

Published by Wiley
ISBN 10: 0470587237
ISBN 13: 978-0-47058-723-2

Chapter 1 - Financial Accounting and Accounting Standards - Questions: 5

Answer

Financial information needs to be relevant and understandable.

Work Step by Step

Decison-usefulness means that financial reporting needs to contain information that can potentially impact decisions of the user. One characteristic of financial reporting that determines its decision-usefulness is relevance. Another factor is understand-ability; the user must be able to interpret the data that is presented in order for the data to be useful for decision-making.
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