Which of the Following Statements Regarding Inflation and Accounting Is

question 21

Multiple Choice

Which of the following statements regarding inflation and accounting is false?

• A) The SEC requires U.S. companies to present supplemental financial information adjusted for the effects of inflation.
• B) Instability of the measuring unit that is the currency occurs in countries with rampant inflation.
• C) In some in Latin American and South American countries, companies have been required to adjust their financial statements to take into account the effects of inflation.
• D) The FASB developed rules for companies in the United States to use to adjust for inflation.

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Definitions:

Primary Market

The market where new securities are issued and bought directly from the issuing company, facilitating capital raising.

Auction Market

A marketplace where buyers and sellers enter bids and offers simultaneously; prices are determined through direct interaction of supply and demand.

Dealer Market

A financial market mechanism in which dealers buy and sell securities for their own accounts.

Money Market

A segment of the financial market where short-term financial instruments with high liquidity are traded.