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Information about fTools How does fTools' Distance Matrix compute the distance and in QGISwhat units?

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Information about fTools Distance Matrix in QGIS

I am new to GIS in general, and QGIS in particular. I am trying to find information about fTools' Distance Matrix function in QGIS, but am having trouble finding documentation…I managed to make a matrix, but I would like to know how the distance is computed, and in what units it is measured.