Chapter 8, Problem 1QC

To determine

To identify: The appropriate answer for the given statement

Answer to Problem 1QC

Option c. The false statement is relevant information is always financial in nature.

Explanation of Solution

Relevant Information

Relevant Information is the information which is useful for the managers to make decisions.

a.

Relevant information always differs among alternatives.

This is also one of the characteristics of relevant information that it is different for different alternative decisions. Therefore, the given statement is not false.

b.

Relevant information always regards the future.

This is one of the characteristics of the relevant information that it always considers future for taking the decisions. This is the true statement.

c.

Relevant information is always financial in nature.

Relevant information is not always financial in nature. It also considers nonfinancial aspects to take a decision. Thus, the given statement is false.

d.

Sunk costs are never relevant to a decision.

Sunk costs are the cost that is incurred in the past and cannot be changed in future. This means it doesn’t consider the future and hence is never relevant to a decision. Hence, the statement is true.