Which of the Following Is Not True About Generally Accepted

question 53

Multiple Choice

Which of the following is not true about generally accepted accounting principles (GAAP) ?

• A) GAAP provide specific guidelines as to how to account for specific events impacting the financial performance of the firm.
• B) The scrupulous application GAAP accounting rules does ensure consistency in comparing one firm's financial performance to another.
• C) It is customary for definitive agreements of purchase and sale to require that a target company represent that its financial books are kept in accordance with GAAP.
• D) GAAP guarantees that a firm's financial books are accurate.
• E) Differences between how a firm records actual financial transactions and how they should be recorded based on GAAP may indicate fraud or mismanagement.

Understanding the composition and purpose of a balance sheet.

Understanding the different categories of cash flow and their calculation.

Identifying and calculating key financial ratios and their significance.

Understanding the importance and methods of financial statement analysis.

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