Information derived from processing transaction reduces uncertainty about a firm’s order backlog or financial position.

Information derived from processing transaction reduces uncertainty about a firm’s order backlog or financial position.
A . True
B . False

View Answer

Answer: A

Explanation:

Information derived from processing transaction reduces uncertainty about a firm’s order backlog or financial position because it provides a quantitative and forward-looking measure of demand. Order backlog is the amount of orders that a firm has received but not yet fulfilled. It reflects the expected future revenue and cash flows of the firm, as well as its ability to meet customer needs and expectations. Order backlog can also indicate the competitive position and market share of the firm, as well as its operational efficiency and capacity utilization. Therefore, disclosing order backlog can help stakeholders such as investors, analysts, managers, and regulators to assess the firm’s performance and prospects more accurately and reliably.

Reference: Sample Exam – GAQM, page 4; Implications of Disclosing Order Backlog, page 1-2; Backlog Definition, Implications, and Real-World Examples – Investopedia