GAAP's flexibility in its reporting standards allows companies to
A)smooth reported earnings over several reporting periods.
B)change accounting estimates to meet target sales or earnings.
C)change accounting principles to improve reported earnings.
D)avoid adopting specific accounting techniques and reporting procedures.

Question

Quizplus · Accepted Answer

GAAP (Generally Accepted Accounting Principles) allows for some flexibility in how companies report their earnings, which can be used to smooth reported earnings over several periods. This can help in presenting a more stable financial performance by spreading out losses and gains.

GAAP's Flexibility in Its Reporting Standards Allows Companies to