By: Nishat Tasnim & Amy Yu Relevance By: Nishat Tasnim & Amy Yu

Relevance The quality of information that indicates that the information makes a difference in a decision If it doesn't make a difference, it is not relevant and needed in accounting records.

Example: A five dollar bill that is found on the ground inside head office of Apple is not relevant because they are a company that has millions of dollars so $5 does not make much of a difference in their records. It will not affect the investors or have an effect in the decision making

Relevant Information Has predictive value or Feedback value or both Must be timely

Predictive Value Helps users forecast future events Example: Investments When investing, the investor will check the company’s financial records before making the decisions. It gives them an estimate for the future on whether investing in the company will help them earn money or lose money.

Feedback Value Confirms or corrects prior expectations Financial statements such as the income statement provides feedback about a company’s income to date. Other financial statements also confirms and corrects expectations about the financial health of a company.

Timely Information must be available before it loses its ability to be useful for decision making Example: For a company, if financial information was given from 2 years ago, it won’t be useful anymore (the data would be outdated and won’t affect anything) and therefore will not be relevant.