Financial accounting and reporting is essentially a means to provide information. If information is to be useful, there must be uncertainty that can possibly be resolved by such information. To understand why accounting is useful at all, analyzing accounting information in the context of certainty would be clearly inappropriate. An information system provides signals that alter the likelihood of the occurrence of future events or states of the world that are part of a decision. A decision problem is characterized by states of the world their probabilities actions the decision maker can choose results of state action combinations and the utilities the decision maker receives from such results. The usefulness of information can only be assessed in the context of a particular decision problem. Thus, the same information system may be useful in one context but not in another.
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