Question

As long as the information reported follows the generally accepted accounting principles (GAAP) guidelines, accountants in a firm have the liberty to use personal judgment to report transactions in the firm’s financial statements.

True/False?

Answer 1

The answer is: True

Step-by-step explanation:

Generally accepted accounting principles (GAAP) are the most common set of accepted accounting principles, standards and procedures that businesses, their accountants and auditors must follow when they disclose their financial statements. For example, the SEC only admits financial statements that follow the US GAAP.

GAAP are meant to ensure a minimum level of consistency in a company's financial statements, so they can be analyzed and compared by investors an regulating authorities.

As long as an accountant follows the GAAP, he or she can use their personal judgement while elaborating the financial statements of a company.