Foreign corporations may be more likely in the future to develop their financial statements according to GAAP so that:

Question

Quizplus · Accepted Answer

Developing financial statements according to GAAP (Generally Accepted Accounting Principles) is a common practice for foreign corporations that want to list their stock on U.S. exchanges. U.S. exchanges require companies to comply with GAAP or an equivalent accounting standard. By adopting GAAP, foreign corporations can enhance their credibility, transparency, and comparability with U.S. peers, which can attract more investors and improve their access to capital markets. Furthermore, GAAP provides a comprehensive framework for financial reporting that covers various aspects of accounting, such as revenue recognition, inventory valuation, asset impairment, and leases, among others. By following GAAP, foreign corporations can demonstrate their adherence to consistent and reliable accounting practices, which can reduce uncertainty and risk for investors. Thus, choosing option D is the best answer. Options A, B, and C are not valid reasons for foreign corporations to adopt GAAP, as they imply unethical or illegal motivations.

Foreign Corporations May Be More Likely in the Future to Develop