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:

Income Statement

A financial statement showing a company's revenue, expenses, and profit or loss over a specific period, often quarterly or annually.

Inventory Unit Costs

The costs associated with obtaining or producing a single unit of inventory, encompassing material, labor, and overhead.

Average Cost Method

An inventory valuation method that assigns the average cost of all similar items in the inventory until they are sold.

LIFO

LIFO, or Last In, First Out, is an inventory valuation method where the last items to be added to inventory are assumed to be the first ones sold.