Final answer:
To be considered relevant, accounting information must be able to influence decisions, going beyond just measurement in monetary units. Relevant information aids in predicting outcomes and making comparisons, and it's an essential quality in GAAP. Comparing monetary values also requires this relevance to ensure the accuracy and utility of financial statements.
Step-by-step explanation:
To be relevant, accounting information must exhibit the characteristic of being capable of making a difference in a decision. This concept is implicit in the quality of relevance that accounting standards, such as the Generally Accepted Accounting Principles (GAAP) in the U.S., emphasize. Relevant information should help users of financial statements in making predictions about the outcomes of past, present, and future events, or in confirming or correcting prior expectations.
Monetary units, such as the U.S. dollar, serve as a unit of account and act as a common denominator that simplifies thinking about trade-offs. However, the relevance of information goes beyond just measurement in monetary units; it encompasses the ability of the information to affect decision-making. For instance, if company A's financial performance is substantially similar to company B's, but company A's financial statements provide more forward-looking information relevant for decision-making, this additional information gives company A a comparative advantage in the eyes of investors.
When comparing and arranging monetary values, it is also essential that these values are not only reported accurately but are relevant to the context and users of the information. Furthermore, the development of cryptocurrencies and the examination of whether they qualify as money underscores the importance of those currencies being a valid unit of account that influences economic decisions, matching the characteristic of relevance mentioned above.