Which of the Following Is True About Understandability as a Qualitative

question 46

Multiple Choice

Which of the following is true about understandability as a qualitative characteristic of financial statements?

• A) The onus to prepare understandable statements and to be able to understand them lies with the preparer.
• B) Where the underlying transactions or economic events are more complex, the user is expected to understand them without the assistance of an advisor.
• C) The onus to prepare understandable statements and to be able to understand them lies with the preparer and the user.
• D) Users with no knowledge of business and financial accounting matters are expected to understand the financial statements.

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Definitions:

Smoot-Hawley

Refers to the Smoot-Hawley Tariff Act of 1930, which raised U.S. import tariffs on thousands of goods, leading to significant trade reductions worldwide.

Trade Restrictions

Measures implemented by governments to regulate or limit international trade, including tariffs, quotas, and embargoes.

Domestic Industries

Industries that produce goods or services within a country’s borders, serving the local economy.

National Industrial Recovery Act

A 1933 U.S. law aimed at boosting economic recovery during the Great Depression by regulating industry standards and promoting fair wages and hours for workers.