Question

Relevance and faithful representation are assumed to need no knowledge of business and financial accounting matters to understand information contained in financial statements.

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Answer 1

Established firms with transparent financial information make it less essential to know the management team personally, leading to increased confidence among investors to provide financial capital.

Step-by-step explanation:

The discussion revolves around the concept that as a firm becomes established and its business strategy seems likely to bring profits, the necessity to know the management team and their business plans personally diminishes. This is due to an increase in the availability of key information about the company's products, revenues, costs, and profits.

When such financial information is transparent and accessible, outside investors such as bondholders and shareholders become more confident in investing financial capital into the firm, even without a personal relationship with its managers.