Which set of rules must management follow when preparing financial statements for investors?

Management must adhere to Generally Accepted Accounting Principles (GAAP) when preparing financial statements for investors in the United States. GAAP consists of a comprehensive set of guidelines and rules that dictate how financial statements should be prepared and presented. These principles help ensure consistency, reliability, and transparency in financial reporting, making it easier for investors to compare the financial health of different companies.

While International Financial Reporting Standards (IFRS) are also widely used, particularly outside the U.S., the question specifically highlights rules that management must follow in the context of investor reporting within the U.S. Accounting standards broadly encompass both GAAP and IFRS; however, the term is not specific enough to imply which set of rules applies in a given jurisdiction. SEC regulations pertain to the legal requirements for publicly traded companies in the U.S. but are not the specific groundwork for the measurement and presentation of financial statements themselves. Therefore, GAAP is the most accurate choice in this context.