What is the main reason that it is necessary for public companies to follow the rules and format set out in the Generally Accepted Accounting Principles (GAAP)when creating financial statements?
A)It is easier to find specific information in such a report if it is laid out in a clear and consistent manner.
B)It ensures that information on the performance of private companies is readily available to the public.
C)It ensures that important information is not omitted and superfluous information is not included.
D)It makes it easier to compare the financial results of different firms.

Question

Quizplus · Accepted Answer

The main reason that it is necessary for public companies to follow the rules and format set out in GAAP is that it makes it easier to compare the financial results of different firms. This is because following GAAP ensures that financial statements are prepared in a consistent and standardized manner, using the same accounting principles and rules. As a result, investors and other stakeholders can compare the financial statements of different companies and make informed decisions based on the information provided.

What Is the Main Reason That It Is Necessary for Public