Why does the government rely on accurate and timely financial data from a company?

• A. To help the company increase its profits
• B. To assist competitors in benchmarking performance
• C. To ensure proper taxation and regulatory compliance
• D. To set the company's internal accounting policies

Answer: (C)

Verified step by step guidance

1. Understand the role of financial data: Financial data provides insights into a company's operations, profitability, and compliance with laws and regulations. Governments rely on this data to ensure companies are adhering to tax laws and regulatory requirements.
2. Recognize the purpose of taxation: Governments use financial data to calculate the correct amount of taxes owed by a company. Accurate data ensures that companies pay their fair share and avoid underpayment or overpayment.
3. Consider regulatory compliance: Governments monitor financial data to ensure companies comply with industry-specific regulations, such as environmental standards, labor laws, and financial reporting requirements.
4. Eliminate incorrect options: The government does not use financial data to help companies increase profits or set internal accounting policies, as these are internal matters for the company. Similarly, assisting competitors in benchmarking performance is not a government function.
5. Conclude the correct answer: The primary reason the government relies on accurate and timely financial data is to ensure proper taxation and regulatory compliance, as this supports the functioning of the economy and adherence to legal standards.