Which of the Following Statements About Generally Accepted Accounting Principles

question 4

Multiple Choice

Which of the following statements about Generally Accepted Accounting Principles (GAAP) is NOT true?

• A) GAAP is a set of rule-based accounting standards established by the Financial Accounting Standards Board (FASB).
• B) GAAP sets out the standards, conventions, and rules that accountants must follow when preparing audited financial statements.
• C) GAAP is complex, providing more than 150 "pronouncements" as to how to account for different types of transactions.
• D) All of the statements above are true.

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Definitions:

New Equity

New equity refers to funds raised by a company through the issuance of additional shares of stock.

Compromise Policy

A strategy aimed at finding a middle ground among different stakeholders' interests or policy alternatives.

Dividend Policy

A company's strategy or set of guidelines for distributing earnings to shareholders in the form of dividends.

Taxes

Taxes refer to the compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.