Which organization is responsible for establishing GAAP in the United States?

Which organization is responsible for establishing GAAP in the United States?

• A. The Internal Revenue Service (IRS)
• B. The Financial Accounting Standards Board (FASB)
• C. The Securities and Exchange Commission (SEC)
• D. The American Institute of Certified Public Accountants (AICPA)

Answer: (B)

The Financial Accounting Standards Board (FASB) is the organization responsible for establishing Generally Accepted Accounting Principles (GAAP) in the United States. It was created to develop accounting standards that ensure consistency, transparency, and comparability in financial reporting across different entities. FASB plays a crucial role in the standard-setting process by issuing Statements of Financial Accounting Standards (SFAS), which are essential for financial reporting and the interpretation of GAAP. While other organizations like the SEC and AICPA are influential in the field of accounting and have their roles, the FASB is specifically tasked with the development and maintenance of accounting standards. The SEC oversees public companies and has authority to enforce GAAP but does not establish it. The AICPA primarily supports the accounting profession and contributes to the development of standards but does not have the same regulatory power as FASB. The IRS, on the other hand, is focused on tax regulations and compliance, which do not directly establish accounting standards. Thus, the FASB's role as the standard-setter is central to the framework of GAAP.

The Financial Accounting Standards Board (FASB) is the organization responsible for establishing Generally Accepted Accounting Principles (GAAP) in the United States. It was created to develop accounting standards that ensure consistency, transparency, and comparability in financial reporting across different entities. FASB plays a crucial role in the standard-setting process by issuing Statements of Financial Accounting Standards (SFAS), which are essential for financial reporting and the interpretation of GAAP.

While other organizations like the SEC and AICPA are influential in the field of accounting and have their roles, the FASB is specifically tasked with the development and maintenance of accounting standards. The SEC oversees public companies and has authority to enforce GAAP but does not establish it. The AICPA primarily supports the accounting profession and contributes to the development of standards but does not have the same regulatory power as FASB. The IRS, on the other hand, is focused on tax regulations and compliance, which do not directly establish accounting standards. Thus, the FASB's role as the standard-setter is central to the framework of GAAP.