Question 3MCQ - Intermediate Accounting (Kieso)

Question

GAAP is comprised of:

1. FASB standards, interpretations, and concepts statements.
2. FASB financial standards.
3. FASB standards, interpretations, EITF consensuses, and accounting rules issued by FASB predecessor organizations.
4. any accounting guidance included in the FASB Codification.

Step-by-Step Solution

Answer

The correct option is (d) any accounting guidance included in the FASB Codification.

Meaning of GAAP

GAAP, also known as generally accepted accounting principles, is defined as a set issued by the Financial Accounting Standards Board (FASB), which comprises principles, standards, and procedures. 

Its objective is to provide accuracy, regularity, and uniformity of the communication of financial information.

Explanation for the correct option

The FASB Accounting Standards Codification is the only origin of authoritative generally accepted accounting principles (GAAP) identified by the FASB to be applied to nongovernmental organizations. 

The accounting literature excluded in the codification is regarded as non-authoritative. Since GAAP is used by FASB in the form of its practice, hence, GAAP comprises any accounting guidance included in the FASB Codification.