An Accountant Generally Has an Obligation to Prepare Statements for a Publicly-Traded

question 5

Multiple Choice

An accountant generally has an obligation to prepare statements for a publicly-traded corporation in "accordance with GAAP." What does this mean?

• A) An accountant must always follow the mandates of rules established by the FASB and not apply international accounting standards
• B) An accountant may follow either the rules of the FASB or the rules of IFRS, depending on the jurisdiction in which the intended readers of the financial statements are located
• C) An American accountant must follow both the rules of the FASB and the rules of the AICPA's Code of Professional Conduct
• D) Any well-recognized, systematic framework of accounting may be applied, as long as the framework is prominently disclosed

---

Definitions:

Shareholders

Individuals or entities that own shares in a corporation, giving them partial ownership of the company.

Firm's Assets

All items of value owned by a company, such as cash, equipment, and intellectual property.

Call Option

An economic deal that permits the buyer to have the option to acquire a stock, bond, commodity, or another asset at a predetermined price during a designated period, without being obligated to do so.

Put Option

A financial contract giving the holder the right, but not the obligation, to sell a specific amount of an underlying asset at a set price within a specific time.