Relevance information to financial reporting, Accounting Basics

Assignment Help:

Q. Relevance information to financial reporting?

To have relevance information should be pertinent to or affect a decision. The information should make a difference to someone who does not already have it. Appropriate information makes a difference in a decision either by affecting users' predictions of outcomes of past and present or future events or by confirming or correcting expectations. Note that information require not be a prediction to be useful in confirming, developing or altering expectations. Expectations are usually based on the present or past. For instance any attempt to predict future earnings of a company would quite probable start with a review of present and past earnings. Even though information that only confirms prior expectations may be less useful it is still relevant because it reduces uncertainty.

Critics have alleged that certain kinds of accounting information lack relevance. For instance some argue that a cost of USD 1 million paid for a tract of land 40 years ago and reported in the current balance sheet at that amount is irrelevant except for possible tax implications to users for decision making today. Such condemnation has encouraged research into the types of information relevant to users.


Related Discussions:- Relevance information to financial reporting

Measurement in financial statements, Q. Measurement in financial statements...

Q. Measurement in financial statements? In December 1984 the FASB issued Statement of Financial Accounting Concepts No. 5 The Recognition and Measurement in Financial Statement

Cash flow liquidity ratios, Liquidity refers to a company's cash position, ...

Liquidity refers to a company's cash position, availability of resources to meet short-term cash requirements, and overall ability to obtain cash in the normal course of business.

Journal.., i want to clear concepts of journal

i want to clear concepts of journal

Show steps in recording business transactions, Steps in recording business ...

Steps in recording business transactions Look at Exhibit 5 to observe the steps in recording and posting the effects of a business transaction. Note that a source document offe

Describe the cost of sales, Q. Describe the Cost of sales? Cost of sale...

Q. Describe the Cost of sales? Cost of sales, cost of goods sold -- expense or cost of all items sold during an accountingperiod. Every unit sold has a cost of sales or cost of

Dividends paid to owners, Q. Dividends paid to owners? Stockholders' eq...

Q. Dividends paid to owners? Stockholders' equity is (a) improved by capital contributed by stockholders and by revenues earned through operations and (b) decreased by expenses

Explain about sales discounts, Q. Explain about Sales discounts? Sales ...

Q. Explain about Sales discounts? Sales discounts when a company sell goods on account it clearly specifies terms of payment on the invoice. For instance the invoice in Exhibit

Uses of cash flow statements, Uses of cash flow statements: The main us...

Uses of cash flow statements: The main usefulness of cash flow analysis is that it facilitates the Finance manager to approximation the cash necessities of the firm and match t

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd