Question

Which of the following type of entities follows FASAB standards when preparing financial statements?

a. Nonprofit entities.
b. Federal government.
c. State and local governments.
d. Business enterprises.

Answer 1

The federal government follows FASAB standards when preparing financial statements. Nonprofits, state and local governments, and businesses follow different accounting standards such as GAAP, FASB, or GASB standards.

Step-by-step explanation:

The Federal Accounting Standards Advisory Board (FASAB) is the entity responsible for establishing accounting standards for federal entities in the United States. Therefore, out of the options provided, the type of entity that follows FASAB standards when preparing financial statements is the federal government. Nonprofit entities, state and local governments, and business enterprises follow different sets of accounting standards, such as Generally Accepted Accounting Principles (GAAP) and standards provided by the Financial Accounting Standards Board (FASB) or the Governmental Accounting Standards Board (GASB).