One problem with GAAP is that it allows companies to change their methods of accounting for important asset and liability accounts without disclosing the change to financial statement users.

Question

Quizplus · Accepted Answer

This statement is false. GAAP requires companies to disclose any changes in accounting methods in their financial statements, as well as the reasons for the change and the effect on financial results. This allows financial statement users to make informed decisions based on consistent and transparent financial information.

One Problem with GAAP Is That It Allows Companies to Change