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)IFRS provides a level of assurance that reported information is accurate.

Question

Quizplus · Accepted Answer

GAAP (Generally Accepted Accounting Principles) provides a set of common accounting standards and guidelines that publicly-traded companies in the U.S. must follow when preparing financial statements. These standards provide some level of protection and assurance to external users that the information reported is reliable and accurate. However, it does not guarantee the accuracy of the information, but rather provides a reasonable expectation of accuracy.

Since External Users of Financial Statements Have No Way to Verify