Once listed, Hinge Health can voluntarily decide to provide financial statements according to any accounting standard framework as long as it discloses which set of accounting standards it uses.

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This question presents a statement about what a listed company can do regarding financial reporting frameworks.
Option 1: True. This asserts that once listed, Hinge Health can voluntarily choose any accounting standard framework as long as it discloses which one it uses. This is not accurate in most jurisdictions. Regulatory bodies and stock exchanges typically require the company to follow a specific, applicable financial reporting framework (such as IFRS or US GAAP) determined by the jurisdiction and listing venue. Simply disclosing the chosen framework does not grant freedom to select any framework at will.
Option 2: False. The claim that a listed company can freely pick any accounting framework is incorrect. In reality, the framework is constrained by the regulatory environment and listing rules, and companies must prepare statements under the mandated standard (or under an allowed alternative with regulators’ approval and appropriate reconciliations). The essential principle is that disclosure of the framework used is required, but it does not imply unlimited choice of frameworks.
Option 1 (True) is therefore an inaccurate characterization of regulatory practice, and Option 2 (False) correctly identifies the constraint that listed entities face regarding accounting standards.
Option 2 also highlights the important nuance: while disclosure of the accounting framework is necessary, it does not provide permissive freedom to select any framework at whim.

ACCT10001_2025_SM2 Practice Exam 1 - Requires Respondus LockDown Browser

Once listed, Hinge Health can voluntarily decide to provide financial statements according to any accounting standard framework as long as it discloses which set of accounting standards it uses.

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