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CSS Financial and Cost Accounting P-1 QUESTION #1196
Question 1
The predictive value of accounting information refers to its ability to:
  • Validate past decisions.
  • Highlight errors in accounting practices
  • Influence future investment decisions.✔️
  • Support regulatory compliance.
Correct Answer Explanation
Predictive value is a component of relevance. Accounting information has predictive value if it can be used as an input to processes employed by users to predict future outcomes — such as influencing future investment, lending, and other economic decisions. It helps users forecast future cash flows and financial performance.