Q6RQ. - Horngren'S Financial And Managerial Accounting

Question

Explain the purpose of Generally Accepted Accounting Principles (GAAP), including the organization currently responsible for the creation and governance of these standards

Step-by-Step Solution

Answer

GAAP is created and governed by the FASB. The purpose of GAAP is to assist in financial reporting and create acceptable accounting practices.

Explanation of FASB

Financial Accounting Standards Board (FASB) is the organization in the U.S. responsible for creating and monitoring the Generally Accepted Accounting Principles (GAAP).

Explanation of GAAP

GAAP is the leading book for the rule of accounting in the U.S. It exhibits the conceptual framework of the objectives, characteristics, and elements of the financial statements issued by businesses. It provides a detailed process or rule for presenting the information in the financial report, which is globally accepted.