An argument to support the requirement that all companies over a certain size should adhere to accounting standards is:
A)Larger companies have greater political and economic importance and this increases the demand for financial information about the entity by external users.
B)Larger companies can afford to pay for complex accounting systems and the experts necessary to design and maintain them.
C)The Conceptual Framework and accounting standards are designed for larger enterprises.
D)The Security Exchange Regulators should only be responsible for large enterprises.

Question

Quizplus · Accepted Answer

Larger companies have a greater impact on the economy and society as a whole, and therefore external users like investors, creditors, and regulators need accurate financial information to make informed decisions. Accounting standards help ensure that financial information is consistent and comparable across companies, making it easier for external users to analyze and interpret the information.

Answer: C
 The Conceptual Framework and accounting standards are designed to provide guidance and principles for financial reporting that apply to all entities, regardless of size. While larger companies may have more complex accounting issues, the same principles apply to smaller companies as well.

Note: B and D are not valid arguments for requiring all companies over a certain size to adhere to accounting standards, as they are based on the assumption that only larger companies can afford or are subject to regulations. All companies, regardless of size, should adhere to accounting standards to ensure the reliability and comparability of financial reporting.

An Argument to Support the Requirement That All Companies Over