- 1 Marks
Question
All business entities prepare financial statements at the end of each accounting period, usually every year. Which of the following statements in respect of the financial reports prepared by business entities is correct?
A. Limited liability companies are compelled by law to disclose their financial statements to the public.
B. Publicly quoted companies are compelled by law to disclose their financial statements to the public.
C. The financial statements of a sole trader are private and should be disclosed.
D. The financial statements of a business partnership are private and should be disclosed.
E. The financial statements of a business partnership are private and should be filed with a government agency.
Answer
B. Publicly quoted companies are compelled by law to disclose their financial statements to the public.
Explanation:
Publicly quoted companies are required by law to make their financial statements available to the public to ensure transparency and accountability to shareholders and potential investors. Other types of entities, such as sole traders and partnerships, do not have this obligation and their financial statements are private.
- Tags: Business Entities, Disclosure, Financial Statements
- Level: Level 1
- Topic: Nature of Business, Types, and Objectives
- Series: MAR/JULY 2020
- Uploader: Theophilus