SOFE
AFE · Question #7
GAAP have two important functions. First, they provide a set of standards that endeavor to measure with reasonable accuracy the assets held, liabilities owed, revenue earned, and expenses incurred…
The correct answer is A. To ensure the comparability of financial data from year to year within each company and with similar data prepared by other companies. See the full explanation below for the reasoning.
Question
GAAP have two important functions. First, they provide a set of standards that endeavor to measure with reasonable accuracy the assets held, liabilities owed, revenue earned, and expenses incurred by the company. For life insurance companies these measurement rules have been prescribed specifically for their specialized products. The second important function of GAAP is:
Options
- ATo ensure the comparability of financial data from year to year within each company and with similar data prepared by other companies
- BTo ensure the comparability of financial data
- CTo ensure the comparability of financial data from month to month within each company and with similar data prepared by other companies
- DTo ensure the comparability of financial data from quarter to quarter within each company and with similar data prepared by other companies
How the community answered
(28 responses)- A86% (24)
- B11% (3)
- D4% (1)
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