The doughnut works from the FMGS and the MCDU. What it tells you is purely based on what has been entered in the MCDU. On a GPS equipped aircraft, where the full approach procedure and the appropriate glide path has been entered in the MCDU, and the way points have been correctly sequenced, the the doughnut will be fairly accurate.
Any sort of map shift or an incorrect value entered into the MCDU will mean the doughnut is inaccurate. How inaccurate will depend on how big the error is!
During a visual approach it can be a useful source of reference, providing you keep in mind its limitations. But the visual picture and the PAPIs should always be the primary source.
Just for completeness, during a NPA, full scale deflection of the VDEV (brick) is 250ft, full scale deflection of the doughnut is 400ft.