To Determine Whether Generally Accepted Accounting Principles (GAAP)were Followed in the Preparation

question 227

Multiple Choice

To determine whether generally accepted accounting principles (GAAP) were followed in the preparation of financial statements,an examination of:

• A)tax documents would be performed by the IRS.
• B)the company's accounting records would be performed by the SEC.
• C)the financial statements and related documents would be performed by an independent auditor.
• D)the financial statements and related documents would be performed by the FASB.

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Definitions:

Proprietorship

A proprietorship, also known as a sole proprietorship, is a type of business that is owned and run by one individual and where there is no legal distinction between the owner and the business entity.

Liabilities

Liabilities are financial obligations or debts that a company owes to others, to be settled over time through the transfer of economic benefits including money, goods, or services.

Owner's Equity

The total value that the owners or shareholders have invested in a company minus any liabilities.

Balance Sheet

A financial statement that shows a company's financial position at a specific point in time by detailing assets, liabilities, and owner's equity.