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Question
Explain the principle of Timeliness.
Solution 1
Financial statements provide useful information on the basis of which users take important decisions. If the statements contain old and late information they are of little use. Therefore, this principle states that the financial statements should be prepared quickly at the end of the accounting period. They should be made available to the users at the earliest possible time. To ensure timely information, the Companies Act requires companies to report quarterly results of their operations.
Solution 2
According to this principle, an accounting system should be established in such a fashion that it provides information to all users in a timely manner. If timely information is available to the management, corrective steps can be immediately taken. In India, there is a provision for publishing half-yearly financial reports of the companies. This provides timely information to investors and potential investors to make their investment decisions.
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