The Major Reason for the Existence of Generally Accepted Accounting

question 50

Multiple Choice

The major reason for the existence of generally accepted accounting principles is to:

• A) limit the amount of professional judgement required by accountants in the preparation of financial reports.
• B) increase business disclosures.
• C) improve the standard of accounting information for decision-making.
• D) make accountants legally accountable for material errors.

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Definitions:

Pure Competition

A market structure characterized by a large number of buyers and sellers where no single entity has the power to influence market prices significantly.

Monopolistic Competition

A market structure characterized by many firms selling products that are similar but not identical, allowing for some degree of market power and product differentiation.

Diffusion of Innovation

The process by which a new idea, product, or behavior spreads through a population or social system over time.

Product Line

A group of related products manufactured by a single company, often serving a particular customer segment or purpose.