Which of the Following Statements Regarding Valuations Used in Accounting

question 31

Multiple Choice

Which of the following statements regarding valuations used in accounting is not correct?

• A) Under GAAP, a company must choose to use historical cost accounting for all assets and liabilities.
• B) Under IFRS rules, a company's financial statements will typically contain a variety of assets and liabilities using different valuation methods.
• C) Even if a company's financial statements contain items valued with different information methods, financial statement readers can still find this information helpful.
• D) Even if a company's financial statements contain items valued with different information methods, the financial information may still be useful for deciding on compliance with contracts, such as bonus agreements.

---

Definitions:

Additional Shares

Shares issued by a company in addition to its existing shares, often to raise extra capital.

Financial Reporting

Generating documents that communicate a company's economic situation to its leadership, shareholders, and regulatory agencies.

External Decision Makers

Individuals or organizations outside of a company (e.g., investors, creditors, regulators) who use the company’s financial information to make decisions about engaging with the company.

Common Stock

Represents ownership shares in a corporation, giving shareholders the right to vote on corporate matters and to receive dividends.