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Question
Which of the following is not true about generally accepted accounting principles (GAAP)?
a. GAAP provide specific guidelines as to how to account for specific events impacting the financial performance of the firm.
b. The scrupulous application GAAP accounting rules does ensure consistency in comparing one firms financial performance to another.
c. It is customary for definitive agreements of purchase and sale to require that a target company represent that its financial books are kept in accordance with GAAP.
d. GAAP guarantees that a firms financial books are accurate.
e. Differences between how a firm records actual financial transactions and how they should be recorded based on GAAP may indicate fraud or mismanagement.
Answer
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