Identify the Accounting Concept or Principle That Relates to the Statement

question 35

Multiple Choice

Identify the accounting concept or principle that relates to the statement in the following question: The financial statements need to contain information that is useful to decision-makers.

• A) Relevance
• B) Faithful representation
• C) Materiality
• D) Comparability

---

Definitions:

Free Markets

Economic systems in which the prices for goods and services are determined by the open market and consumers, without government intervention.

Moral-Hazard Problem

A situation in which one party engages in risky behavior knowing that it is protected against the risk because another party will incur any resulting costs.

Monitoring

The process of systematically observing, checking, and recording activities or data to ensure proper compliance or performance.

Moral Hazard Problem

The risk that one party to a transaction takes on more risk because it knows that the other party bears the consequences of those risks.