Question

Which of the following is most associated with financial accounting reports?

a. can be prepared periodically, or as needed
b. can have both objective and subjective information
c. can be prepared for the entity or segment
d. prepared in accordance with GAAP

Answer 1

Financial accounting reports are most closely linked to GAAP, which sets the standards for reporting financial information faithfully and consistently. Adherence to GAAP is essential for the transparency and reliability of financial documents like income statements and balance sheets used by various stakeholders.

Step-by-step explanation:

Financial accounting reports are most associated with the guidelines known as the Generally Accepted Accounting Principles, or GAAP. GAAP is a collection of accounting standards and common industry usage that is designed to ensure that financial statements are consistent, comparable, and complete. These principles guide accountants by providing a framework for how to record and report the financial activities of a business.

Companies in the United States that issue stock to the public are required to prepare their financial statements in accordance with GAAP. These reports include essential documents such as the income statement, balance sheet, and cash flow statement, which are used by investors, creditors, and others to make informed decisions.

The adherence to GAAP ensures the financial information presented is true, reliable, and corresponds to the transactions and events that have occurred. This is essential for maintaining trust and transparency in the financial markets.