Chapter 3 - The Accounting Information System - Review and Practice - Using Your Judgment - Accounting, Analysis, and Principles - Page 146: Principles

Within those short periods when accounting records are made, faithful representation is sacrificed for the sake of relevance. The financial statements prepared before the lapse of the full accounting year ignore the adjustments such as those of prepaid expenses prepared at the conclusion of the accounting period. Even though the adjustments are ignored, the financial information is relevant because users rely on it to make predictions and crucial decisions regarding a reporting entity.

Within those short periods when accounting records are made, faithful representation is sacrificed for the sake of relevance. The financial statements prepared before the lapse of the full accounting year ignore the adjustments such as those of prepaid expenses prepared at the conclusion of the accounting period. Even though the adjustments are ignored, the financial information is relevant because users rely on it to make predictions and crucial decisions regarding a reporting entity.