RELEVANCE VS. RELIABILITY...WHICH IS MORE IMPORTANT?
Good Evening Steemians,
An interesting topic was brought up in my accounting theory class tonight.
What is more important, relevant or reliable information?
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Relevance requires that the financial accounting information should be such that the users need it and it is expected to affect their decisions.
Reliability requires that the information should be accurate and true and fair.
Of course, there is a trade off between the two terms, but is one more important than the other.
Please comment below and let me know what you think!
Great post UPVOTED and RESTEEMED
I think you need to have an even balance....UPVOTED
With respect to historical cost, valuing an asset as historical cost is reliable because that is the true price paid at a point in time. As time progresses, the historical cost, while a reliable and accurate amount, may no longer be relevant. This is why inventory for example is often valued at the a lower of historical cost or the market value (LCM) - ignoring FIFO/LIFO issues for a second.
This applies in non-accounting settings too, most information as soon as it is available is outdated, and although historical information is reliable, it is often not indicative of the future.
You hit it spot on. Lots of great points you made..I appreciate your comments @cryptotax!
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