Relevance Is an Objective of External Financial Reporting and Means

question 71

Multiple Choice

Relevance is an objective of external financial reporting and means

• A) the financial reports of a business are assumed to include the results of only that business's activities.
• B) financial information can be compared across businesses because similar accounting methods have been applied.
• C) the financial information possesses a feature that allows it to influence a decision.
• D) the financial information depicts the economic substance of business activities.

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Definitions:

Fourth Root

A number that when raised to the fourth power yields the original number; it is the square root of the square root.

Inversely

Describes a relationship where one quantity increases as another decreases at a consistent rate, often used in proportion and inverse variation contexts.

Sixth Root

The sixth root of a number is the value that, when multiplied by itself five more times, gives the original number.

Constant of Proportionality

The fixed value that relates two proportional quantities.