Question

The impact of financial accounting information on investors' and creditors' decisions is closely related to the concept of:_______

Answer 1

The impact of financial accounting information on investors' and creditors' decisions is closely related to the concept of materiality.  In auditing and accounting, the term "materiality" refers to the importance or "significance" of a sum, a transaction, or a discrepancy.

According to the general accepted accounting principles (GAAP) criterion known as "materiality," all items that are conceivably likely to have an influence on investors' decision-making must be documented or disclosed in full in a company's financial statements. The significance of information in financial accounts of a corporation is referred to as materiality. A transaction or business decision is "material" to the business if it necessitates reporting to investors or other users of the financial statements and cannot be excluded.

#SPJ4