Which of the following help ensure the usefulness of accounting information?

Question

Quizplus · Accepted Answer

All three factors - reliability, understandability, and relevance - are crucial in ensuring that accounting information is useful.

Reliability refers to the accuracy and credibility of the information provided. This means that the data should be based on objective evidence and not on opinions or estimates. Users must be confident that the financial statements reflect the company's true financial position and performance.

Understandability means that the financial information presented should be comprehensible to users with a reasonable level of accounting knowledge. If users cannot understand the information provided, they will not be able to use it effectively.

Relevance refers to the information's usefulness in decision-making. The information must be relevant to the needs of the users and help them make informed decisions. For example, information about a company's profitability, liquidity, and solvency are relevant to investors, creditors, and other stakeholders.

Which of the Following Help Ensure the Usefulness of Accounting