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ACCA Applied Knowledge · Business and Technology · Financial information provided by business

A retail company's finance director wants to rely on information from the sales ledger when preparing a report for the board. The report will be used to decide whether to extend credit terms to customers. Which of the following BEST describes why the information must be accurate and timely rather than merely available in large volume?

Accurate and timely information matters because decisions based on wrong or out-of-date data can be poor, however much data exists. Quantity does not make up for weak quality, and internal management decisions such as credit terms need quality information just as external reporting does.

  1. ALarge volumes of data always improve the quality of decisions, so accuracy and timeliness are secondary
  2. BInformation that is inaccurate or out of date can lead managers to make poor decisions, however much data is availableCorrect
  3. CAccuracy and timeliness matter only for information that is reported to external users such as shareholders

Explanation

Good information must be accurate, timely and relevant to its purpose. If it is wrong or out of date, decisions based on it, such as extending credit terms, may be poor regardless of volume. The first option is wrong because volume does not compensate for poor quality, and the third is wrong because internal decisions also depend on quality information.

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