How does information differ from data?

The correct answer illustrates the key distinction between information and data by stating that information is data that has been processed in a meaningful way. This means that raw data, which consists of unprocessed facts and figures, gains context, relevance, and purpose when it is analyzed, structured, or interpreted.

In practical terms, data on its own can be any collection of values, such as a series of numbers without any context, whereas information transforms that data into something that can inform decisions and support operations. For example, a list of temperatures recorded over a week (the data) can be processed to provide insights about trends in weather (the information). This transformation is crucial in accounting and other fields where actionable insights are necessary for effective decision-making.

Understanding this distinction is vital for professionals in accounting and finance, as it emphasizes the importance of transforming raw data into useful information that can guide strategic actions.