Since external users of financial statements have no way to verify the reported information
A)They cannot make informed decisions from financial information.
B)FASB provides consequences to companies who distribute False - managerial accounting reports to outsiders.
C)GAAP provides a level of protection or assurance that the reports will follow certain standards.
D)None of these ans choices are correct.

Question

Quizplus · Accepted Answer

GAAP provides a set of guidelines and standards that companies must follow when preparing their financial statements. This provides external users with a level of assurance that the information reported is reliable and consistent, even though they cannot independently verify the accuracy of the reported information. Therefore, external users can make informed decisions based on financial information that follows GAAP. Option A and B are incorrect as external users can make informed decisions based on reliable and consistent financial information. Option D is incorrect as option C is correct.

Since External Users of Financial Statements Have No Way to Verify