Which of the following statements is true regarding the retention of accounting records?

• A. Accounting records must be retained for a period specified by law or regulation, which often ranges from 5 to 7 years.
• B. Accounting records can be discarded immediately after the financial statements are prepared.
• C. There are no legal or regulatory requirements for retaining accounting records.
• D. Only electronic copies of accounting records are acceptable for retention purposes.

Answer: (A)

Verified step by step guidance

1. Understand the importance of accounting records: Accounting records are essential for tracking financial transactions, preparing financial statements, and ensuring compliance with legal and regulatory requirements.
2. Identify the legal and regulatory requirements: Research the specific laws or regulations in your jurisdiction that dictate the retention period for accounting records. This period often ranges from 5 to 7 years, depending on the country or industry.
3. Evaluate the options provided in the question: Analyze each statement to determine its accuracy based on the legal and regulatory requirements. For example, the statement 'Accounting records can be discarded immediately after the financial statements are prepared' is incorrect because records must be retained for a specified period.
4. Consider the format of accounting records: While electronic copies are widely accepted, physical copies may also be retained depending on the organization's policies and legal requirements. The statement 'Only electronic copies of accounting records are acceptable for retention purposes' is not universally true.
5. Select the correct statement: Based on the analysis, choose the statement that aligns with the legal requirement to retain accounting records for a specified period, typically ranging from 5 to 7 years.