Decision Usefulness Theory

Decision Usefulness Theory suggests that financial information should be prepared in a way that helps users, like investors or creditors, make informed economic decisions. The focus is on providing relevant and reliable data that accurately reflects a company's financial health, enabling stakeholders to assess its performance, value, and risk. Essentially, it prioritizes clarity and accuracy in financial reporting to support sound decision-making, rather than just complying with standards or historical accuracy alone. This approach emphasizes usefulness as the primary goal of financial information for those making economic choices.