Power system topology is defined by the connectivity among power system components such as generators, power transformers, transmission lines, loads, etc. The knowledge about topology is important for correct execution of many monitoring, control and protection actions. This paper introduces an approach that assures accurate determination of the topology in real-time. To be able to justify why this approach is important, the paper gives a background of the topology determination problem and discusses the impact on various application functions. An implementation of the proposed approach consisting of hardware and software modules is outlined. Examples of the functional improvements due to the increased accuracy of topology determination at both the substation and system-wide level are presented at the end.