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CMA Intermediate · Management Accounting · Introduction to Management Accounting

A firm finds that its management accounting reports take 20 days to prepare, by which time the data are outdated for pricing decisions. Which limitation does this illustrate?

This illustrates the limitation of lack of timeliness. Management accounting information must reach managers while decisions are still open; reports delivered after twenty days are outdated for pricing and lose their usefulness, regardless of how accurate they may be.

  1. ALack of timeliness reducing the usefulness of informationCorrect
  2. BAbsence of any link with cost data
  3. CInability to use budgets
  4. DExclusive reliance on external data

Explanation

Information that arrives after the decision point loses relevance. The delay is about timing, not about missing cost data, budgets or external sources.

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