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Timeliness Principle in Accounting

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Questions and Answers

What does the timeliness principle in accounting refer to?

Ensuring that accounting information is kept confidential

Providing accounting information to users in a timely manner to meet their decision-making needs (correct)

Delaying the provision of accounting information to users

Presenting accounting information with a delay to confuse users

Why is timeliness of accounting information important?

Timeliness of information has no impact on users' decision-making

Confusing users with delayed information enhances decision-making

Timely information is generally more relevant to users' decision-making needs (correct)

Delay in providing information makes it more relevant to users

How is the timeliness principle related to the relevance principle?

Partially related, as relevance is not affected by timeliness

Opposite, as delayed information is more relevant

Unrelated, as timeliness does not affect relevance

Closely related, as timely information is generally more relevant (correct)

What happens when there is a delay in providing accounting information?

The information becomes less relevant to users' decision-making needs Signup and view all the answers

Why is timely presentation of accounting information desirable?

Because timely information is generally more relevant for users Signup and view all the answers

According to the accrual basis of accounting, when are the effects of transactions recognized?

When they occur Signup and view all the answers

What does the going concern basis of accounting assume about an entity?

It will continue operating for the foreseeable future Signup and view all the answers

Why is the going concern assumption important for the valuation of assets?

To support valuation on a break-up basis Signup and view all the answers

Under the accrual basis of accounting, when are the effects of transactions recognized?

When they occur Signup and view all the answers

What is the assumption made in financial statements under the going concern basis?

Entities will continue in operation for the foreseeable future Signup and view all the answers

Why is the going concern assumption important for asset valuation?

It may require valuing assets on a break-up basis if the entity will cease trading Signup and view all the answers

How are events recognized in accounting under the accrual basis?

In the accounting records when they occur Signup and view all the answers

What happens if an entity does not plan to continue its operations in the foreseeable future?

The financial statements may have to be prepared on a different basis Signup and view all the answers