Interim financial statements:
A) Are statements prepared for periods of less than one year.
B) Require the use of the perpetual method for inventories.
C) Cannot be prepared if the company follows the conservatism principle.
D) Are necessary to achieve full disclosure about a business's operations.
E) Are required by the Congress.

Question

Quizplus · Accepted Answer

Interim financial statements are prepared for periods of less than one year, typically for a quarter or a half-year.

Answer: D 
 Interim financial statements are necessary to achieve full disclosure about a business's operations for the periods between annual financial statements. They provide investors and stakeholders with updates on the company's financial performance and position.

Incorrect options:
B) The use of the perpetual method for inventories is not specific only to interim financial statements. It is a generally accepted accounting principle that can be used for both interim and annual financial statements.
C) The conservatism principle is a basic accounting principle that suggests that a company should recognize expenses and liabilities as soon as possible while delaying the recognition of income and assets. Its application has no bearing on the preparation of interim financial statements.
E) Interim financial statements are not required by Congress or any specific legislation. However, public companies are required to file quarterly reports with the Securities and Exchange Commission (SEC), which include financial statements for the period.

Interim Financial Statements