Which of the following statement(s)is/are true of general-purpose financial reports?
A)General purpose financial reports should be prepared by all reporting entities.
B)General-purpose financial reports are reports that comply with statements of accounting concepts and accounting standards.
C)General-purpose financial reports are intended to meet the information needs common to users who are able to command the preparation of reports.
D)All of the given answers.
E)General purpose financial reports should be prepared by all reporting entities and general-purpose financial reports are reports that comply with statements of accounting concepts and accounting standards.

Question

Quizplus · Accepted Answer

The correct answer is B. General-purpose financial reports are reports that comply with statements of accounting concepts and accounting standards.General-purpose financial reports are designed to provide financial information that is useful to a wide range of users in making economic decisions. These reports are prepared in accordance with a framework of accounting concepts and standards to ensure consistency, reliability, and comparability of financial information across different entities.
Here's why the other statements are not entirely true:
1. General-purpose financial reports should be prepared by all reporting entities. - This statement is not entirely true because not all entities are required to prepare general-purpose financial reports. Some smaller entities, for example, may be permitted to prepare financial reports that are less comprehensive or that follow a different reporting framework.
3. General-purpose financial reports are intended to meet the information needs common to users who are able to command the preparation of reports. - This statement is misleading. General-purpose financial reports are intended to meet the common information needs of a wide range of users, not just those who have the power to demand the preparation of reports. These users include investors, creditors, employees, and the public, among others.
4. All of the given answers. - Since statement 1 and 3 are not entirely true, this option is incorrect.
5. General-purpose financial reports should be prepared by all reporting entities and general-purpose financial reports are reports that comply with statements of accounting concepts and accounting standards. - This combines the incorrect statement 1 with the correct statement 2, making it an incorrect choice as well.
Therefore, the statement that accurately describes general-purpose financial reports is that they are reports which comply with accounting concepts and standards, ensuring that they are useful to a broad range of users for making economic decisions.

Which of the Following Statement(s)is/are True of General-Purpose Financial Reports