Relevance
Accounting glossary · Understand, connect, apply
Relevance is the ability of financial information to make a difference to users’ decisions through predictive value, confirmatory value or both.
Example
Information about overdue customer balances helps a lender assess future collections and compare earlier expectations with actual results.
Remember the difference
Information can be relevant even if a particular user chooses not to use it. Materiality is entity-specific.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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