What defines material information in the context of financial statements?

Material information in the context of financial statements is defined as information that could reasonably influence the decisions made by users of those statements. This concept emphasizes the importance of relevance in financial reporting—a key principle of accounting. When preparing financial statements, it is crucial to ensure that all information disclosed is pertinent and has the potential to affect the economic decisions of stakeholders, such as investors, creditors, and analysts.

The notion of materiality acknowledges that not all information needs to be disclosed; rather, only that information which could sway the user's economic choices is considered material. For example, a company's earnings report would include material information such as significant revenue changes or notable events, as these could impact an investor's decision to buy, hold, or sell shares.

The other options describe characteristics of information that are not aligned with the concept of materiality in financial reporting. Irrelevant information does not hold weight in decision-making, while information that cannot be quantified in monetary terms may not provide the clear quantitative context necessary for financial statements. Additionally, limiting the relevance of information to tax reporting purposes overlooks its broader implications for financial analysis and stakeholder decision-making. Thus, focusing on materiality ensures more meaningful financial communication.