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GPS satellites carry atomic clocks that provide extremely accurate time. The time information is placed in the codes broadcast by the satellite so that a receiver can continuously determine the time the signal was broadcast.
The accuracy of GPS does depend on certain factors, mainly that the receiver has to get reception from a large swath of sky. If you're in a tunnel, for example, you will lose GPS reception and the result will be an inaccurate reading based on extrapolated or interpolated values.