If the management of a company believes that in complying with the accounting standards, the financial reports would not show a true and fair representation, they:
A)are not legally required to comply with the standards.
B)just have to disclose that they have not used the standard.
C)do not have to adhere to the standards in this situation.
D)must comply with the standards and have the option of including a note in the report.

Question

Quizplus · Accepted Answer

According to generally accepted accounting principles (GAAP), companies must comply with accounting standards to ensure that financial reports accurately reflect the company's financial position. However, if a situation arises where compliance with accounting standards would not result in a true and fair representation of the company's financial position, the company must still comply with the standards but has the option of including a note in the financial report to explain the situation. This ensures transparency and provides context for the financial statements.

If the Management of a Company Believes That in Complying