Multiple Choice
Which organization is responsible for establishing U.S. Generally Accepted Accounting Principles (GAAP)?
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15. GAAP vs IFRS
GAAP vs. IFRS: Introduction
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The accounting profession follows generally accepted accounting principles (GAAP) as defined by which of the following organizations?
A
Financial Accounting Standards Board (FASB)
B
International Accounting Standards Board (IASB)
C
Securities and Exchange Commission (SEC)
D
American Institute of Certified Public Accountants (AICPA)
Verified step by step guidance1
Understand the concept of Generally Accepted Accounting Principles (GAAP), which are a set of rules and standards used in financial accounting to ensure consistency, reliability, and comparability of financial statements.
Recognize that GAAP is primarily established and maintained by authoritative organizations that oversee accounting standards and practices.
Learn that the Financial Accounting Standards Board (FASB) is the primary organization responsible for defining and updating GAAP in the United States.
Understand the role of other organizations mentioned in the problem: the International Accounting Standards Board (IASB) develops International Financial Reporting Standards (IFRS), the Securities and Exchange Commission (SEC) oversees public companies and enforces compliance with GAAP, and the American Institute of Certified Public Accountants (AICPA) provides guidance and ethical standards for CPAs.
Conclude that while all these organizations play important roles in the accounting profession, the FASB is the organization specifically tasked with defining GAAP in the United States.
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