The Major Reason for the Existence of Generally Accepted Accounting

question 7

Multiple Choice

The major reason for the existence of Generally Accepted Accounting Principles is:

• A)To make accountants legally liable for errors
• B)To increase business profits
• C)To improve the standard of accounting information for decision-making
• D)To create work for accountants

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Definitions:

Future Value

A prediction of what a current asset will be worth at a particular future date, using an assumed growth rate.

Discount Rate

The discount rate, in finance, is the interest rate used to determine the present value of future cash flows, influencing the attractiveness of investments.

Perpetuity

A financial instrument that provides a stream of indefinite cash flows, or payments, with no end date.

Interest Rate

Interest rate is the proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.