13 Questions
What does the timeliness principle in accounting refer to?
Providing accounting information to users in a timely manner to meet their decision-making needs
Why is timeliness of accounting information important?
Timely information is generally more relevant to users' decision-making needs
How is the timeliness principle related to the relevance principle?
Closely related, as timely information is generally more relevant
What happens when there is a delay in providing accounting information?
The information becomes less relevant to users' decision-making needs
Why is timely presentation of accounting information desirable?
Because timely information is generally more relevant for users
According to the accrual basis of accounting, when are the effects of transactions recognized?
When they occur
What does the going concern basis of accounting assume about an entity?
It will continue operating for the foreseeable future
Why is the going concern assumption important for the valuation of assets?
To support valuation on a break-up basis
Under the accrual basis of accounting, when are the effects of transactions recognized?
When they occur
What is the assumption made in financial statements under the going concern basis?
Entities will continue in operation for the foreseeable future
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
How are events recognized in accounting under the accrual basis?
In the accounting records when they occur
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
Learn about the timeliness principle in accounting, which emphasizes the importance of providing accounting information in a timely manner to meet users' decision-making needs. Understand how timely information is more relevant and valuable to users compared to delayed information.
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