Question

In what circumstance is information about an element of the financial statement not relevant?

a) Information is always relevant.
b) When it doesn't influence decisions of users.
c) Information is never irrelevant.
d) When it's immaterial.

Answer 1

Financial information is not relevant if it doesn't affect decision-making or if it's considered immaterial, which is when its omission wouldn't influence users' economic decisions.

Step-by-step explanation:

Information about an element of the financial statement is not relevant in the circumstance when it does not influence decisions of the users of that financial statement. Specifically, if the information is deemed immaterial, meaning that its omission or misstatement could not influence the economic decisions of users taken on the basis of the financial statements, it is considered not relevant. Factors like imperfect information and decision-making under conditions such as limited time, overwhelming or scarce information, or the use of heuristics can also affect the relevance of financial information.