What is one of the responsibilities of a company regarding accounting records?

• A. Keep adequate accounting records.
• B. Prepare only management accounts.
• C. Disclose only to directors.
• D. Provide tax returns.

Answer: (A)

Keeping proper, adequate accounting records is essential because these records provide the evidence behind every transaction and form the basis for preparing the company’s financial statements. They should cover all material income, expenditure, assets and liabilities, and be detailed enough to show how the numbers on the accounts were derived. With good records, the true and fair view can be shown, and the company can meet statutory and audit requirements.

Preparing only management accounts isn’t sufficient because statutory financial statements must be supported by complete records, not just internal summaries. Disclosing records only to directors isn’t correct since records may need to be inspected by auditors and regulators as part of compliance. Providing tax returns is a separate obligation, though good records help ensure accurate tax filings.