Financial Statements That Do Not Include Interpretation and Explanation by Management

question 86

Multiple Choice

Financial statements that do not include interpretation and explanation by management are in violation of which GAAP principle?

• A) Principle of sincerity
• B) Principle of continuity
• C) Principle of full disclosure
• D) Principle of regularity
• E) Principle of prudence

---

Definitions:

Hierarchy of Authority

The ordered arrangement of individuals within an organization according to their levels of power or authority, usually from the highest to the lowest rank.

Rationality

The quality of being based on or in accordance with reason or logic.

Functional Structures

An organizational design that groups employees according to their specialized roles or functions, facilitating efficiency and expertise development.

Cost Containment

Strategies or measures implemented to control or reduce expenses within an organization or project.