5RQ - Horngren'S Financial And Managerial Accounting

Question

When is nonfinancial information relevant?

Step-by-Step Solution

Answer

The non-financial information is considered relevant when managers are required to make qualitative decisions associated with the business. 

Step 1: Meaning of Information

In general terms, information refers to the data which is organized and structured. Such data can be financial and non-financial or may be associated with the technical information of a business concern. 

Step 2: Relevancy of non-financial information

If expected future data differs among the alternatives, in such a case, non-financial information is relevant. Also, when non-financial information plays an important role in drafting quantitative and qualitative decisions and impacts the potential decision of the managers, it becomes relevant.