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

Management, briefly explain management process

briefly explain management process

Code of ethics for auditor, The following situations involve a possible vio...

The following situations involve a possible violation of the MIA ByLaws (on professional ethics, conduct and practice). For each situation, (1) decide whether or not the Code has b

Calculate the gross margin percentage, Q. Calculate the gross margin percen...

Q. Calculate the gross margin percentage? Calculate the gross margin percentage by using the following formula Grossmargin percentage = Grossmargin/Net sales To show th

Jane has a $35, Jane has a $35,000 bank loan that she wishes to pay off in ...

Jane has a $35,000 bank loan that she wishes to pay off in five equal annual payments with 12% interest. If the first payment is due one year from today, what will be the amount

Limitation of the use of accounting information, What is a limitation of th...

What is a limitation of the use of accounting information that is totally outside the entity's control? A  changes in legal reporting requirements B  changes in inventory valua

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 fob shipping point freight collect, Q. Explain FOB shipping point f...

Q. Explain FOB shipping point freight collect? FOB shipping point freight collect - Buyer both initially pays and incurs the freight chargers. The proper party (buyer) paid the

Describe the functions and limitations of accounting, 1. Describe the follo...

1. Describe the following with detailed example: i. Wealth Maximization ii. Profit maximization 2. Describe the functions and limitations of accounting. 3. Prepare a deta

What is journal, Q. What is journal? In explaining the rules of credit ...

Q. What is journal? In explaining the rules of credit and debit we recorded transactions directly in the accounts. Every ledger (general ledger) account shows only the increase

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