Which of the following statements best describes predictive value?
A)Helps capital providers make decisions about future actions.
B)Provides all information necessary for a reliable decision.
C)Enables users to identify similarities and differences.
D)Enables users to comprehend the meaning of the information.

Question

Quizplus · Accepted Answer

Predictive value is the capacity of financial information to be reliable in predicting future outcomes or events. Therefore, it helps capital providers make informed decisions about future actions. Option B is incorrect as predictive value does not provide all necessary information for a reliable decision, only one aspect of it. Option C is incorrect as the ability to identify similarities and differences is more related to comparability. Option D is incorrect as comprehension of information does not relate to predictive value.

Which of the Following Statements Best Describes Predictive Value