Question

Explain relevance of Accounting?​

Answer 1

Answer:

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Explanation:

Relevance in accounting means the information we get from the accounting system will help the end-users to take important decisions. ... Therefore relevance in accounting indicates the capacity of influencing the end-users of the financial statement in their decision-making process.

Answer 2

Answer:

Relevance in accounting means the information we get from the accounting system will help the end-users to take important decisions. End users can be either internal or external stakeholders. Internal stakeholders include managers, employees, and business owners. By external stakeholders, we mean investors, lenders etc. Therefore relevance in accounting indicates the capacity of influencing the end-users of the financial statement in their decision-making process.

Explanation:

As per GAAP, the information should be useful, understandable, timely, and pertinent for the end-users in making important decisions.

A ten-year-old income statement doesn’t hold much significance to an investor.

The financial information

must be timely to be relevant to the investors.

Finally, relevance in accounting also means that it should be useful for the decision making process for the end-users. For example, companies could report the current salary of the employees in an understandable and timely manner, but this doesn’t make this information relevant to an investor.