What Two Criteria Must Be Met for Information to Be

question 99

Essay

What two criteria must be met for information to be considered relevant to decision making?

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Definitions:

Full Disclosure Principle

The accounting principle that requires companies to fully disclose on their financial reports changes in accounting procedures and methods along with effects of the change as well as justification for change.

Inventory Valuation Method

The approach used to assess and report the value of a company's inventory, including methods such as FIFO (First In, First Out), LIFO (Last In, First Out), and average cost.

Financial Reports

Documents that provide an overview of a business's financial condition, including balance sheets, income statements, and cash flow statements.

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made periodically, often at the end of an accounting period, rather than continuously.