Relevance, one of the desirable qualities of accounting information, implies:
A)the capacity of information should be based on five-year average historical data.
B)the capacity of information to affect a decision.
C)the capacity of information should be based on market expectations.
D)that all companies should use same valuation methods such as LIFO and FIFO.

Question

Quizplus · Accepted Answer

Relevance in accounting means the information provided should have the ability to influence economic decisions of users by helping them evaluate past, present, or future events or confirming or correcting their past evaluations. Option B directly addresses this by stating the information should have the capacity to affect a decision.

Relevance, One of the Desirable Qualities of Accounting Information, Implies