What Is the Main Reason That It Is Necessary for Public

question 42

Multiple Choice

What is the main reason that it is necessary for public companies to follow the rules and format set out in the Generally Accepted Accounting Principles (GAAP) when creating financial statements?

• A) It ensures that important information is not omitted and superfluous information is not included.
• B) It ensures that information on the performance of private companies is readily available to the public.
• C) It makes it easier to compare the financial results of different firms.
• D) It is easier to find specific information in such a report if it is laid out in a clear and consistent manner.

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Definitions:

Substitutes

Goods or services that can be used in place of each other to satisfy consumer needs or desires.

Supply Curve

A graph showing the relationship between the price of a good and the amount of it that producers are willing to sell at each price level.

Market Period

A short duration in which the quantity of goods supplied to the market cannot be changed.

Perishable Good

A type of good that has a limited shelf life and can spoil or become unusable after a certain period, such as food products.