ACCA BT · Chapter 7 · Question 9 of 10
Why do governments and regulators generally require companies to prepare financial statements in accordance with an accepted set of accounting standards?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) To improve the comparability and reliability of financial information for users
Explanation
Accounting standards narrow the range of acceptable treatments, improving consistency, comparability and credibility of financial statements for investors and other users. They do not guarantee profits, they still require professional judgement, and they are intended to restrict, not encourage, profit-maximising choices.
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