Question

true or false , timeliness of accounting information is that quality of the information that influences the decision maker before the information loses its relevance

Answer 1

Solution:

Answer: True

The given statement is true that timeliness of accounting information is that quality of the information that influences the decision maker before the information loses its relevance.

Explanation: Timeliness means making information available to decision makers before it loses its capacity to influence decisons. Timeliness in accounting means how quickly the accounting information is available to users to fulfill their decision making needs and delay in provision of information tends to render it less relevant to the decision making needs of the users. For example, if a company was to issue its financial statements to the public after 12 months of the accounting period, the users of the financial information or decision makers such as potential investors, would probably find it hard to assess whether the present financial circumstances of the company have changed drastically from those reflected in the financial statements. Thus, such financial statements issued after 12 months of the accounting period has no relevance for the decision makers.

Thus, on the basis of the above explanation we can conclude that the statement, that timeliness of accounting information is that quality of the information that influences the decision maker before the information loses its relevance is true.