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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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According to Statement of Financial Accounting Concepts No. 8, to be relevant an earnings report is expected to have which of the following?

Chapter 2, Problem 3MC, According to Statement of Financial Accounting Concepts No. 8, to be relevant an earnings report is

To determine

Identify the values the earnings report is expected to have to be relevant.

Explanation

Financial reporting:

Financial reporting is the procedure used to communicate the information obtained from financial statements prepared for a company. It is essential to disclose the data to various stakeholders of the company, as various decisions need to be taken by the stakeholders.

Relevance:

Accounting information is considered to be relevant, if it’s capable of making difference between the decision made by the financial statement users, because the information provided in the accounting information will be considered different if helps the users to predict the future outcomes and if is material in nature and amount.

Option (b):

For an earnings report to be relevant, it is expected to have both the predictive value and the confirmatory value...

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