Asked Dec 21, 2019

Briefly explain the meaning of decision-usefulness in the context
of financial reporting.


Expert Answer

Step 1

Decision usefulness approach to financial reporting:

The theory of how risk-averse investors make rational investment decisions. It also demonstrates that major professional accounting standard-setting bodies have adopted the theory as a guide to the preparation of useful financial accounting information.

Step 2

Concept of decision usefulness:

The decision usefulness approach is an approach to the presentation of financial accounting information that studies the theory of investor decision making in order to infer the nature and type of information that investors need.

Outline the single-person decision theory:

  • It suggests how a rational individual makes optimal decision in the presence of uncertainty.
  • It requires the decision m...

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