Financial Statements That Do Not Include Interpretation and Explanation by Management

question 86

Multiple Choice

Financial statements that do not include interpretation and explanation by management are in violation of which GAAP principle?

• A) Principle of sincerity
• B) Principle of continuity
• C) Principle of full disclosure
• D) Principle of regularity
• E) Principle of prudence

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Definitions:

Endorsed

Officially approved or supported, or signed on the back to transfer ownership or to show agreement.

Negotiability

The feature of a financial instrument that allows it to be transferred or assigned from one party to another in a manner that the transferee obtains a good title.

Preponderance of the Evidence

Preponderance of the evidence is the standard of proof in most civil trials, which means that the evidence on one side outweighs, or is more convincing than, the evidence on the other side.

Performance

The action or process of carrying out or accomplishing an action, task, or function.