Which of the Following Is Not a Rationale for Regulating

question 3

Multiple Choice

Which of the following is not a rationale for regulating financial accounting information?

• A) To protect users from fraudulent or misleading information
• B) Market for information without regulation is inefficient, and may result in production of sub-optimal amount of information
• C) To assist management with better information, and reports for use by management and parties within the organisation
• D) To ensure equal access to information by all interested parties, including those that have limited power to demand it

---

Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, typically with dividends that must be paid out before dividends to common stockholders.

Par Value

A nominal or face value assigned to a share of stock by the company's charter, which may not reflect the actual market value.

Paid-In Capital

Funds raised by a company from selling its shares to investors, beyond the nominal value of the shares.

Cash Dividend

A payment made by a company out of its earnings to investors in the form of cash.