Question

The rules, standards and conventions that guide the preparation of financial accounting for US firms are called ___________ __________ ___________ principles.

a) Generally Accepted Accounting Principles (GAAP)

b) International Financial Reporting Standards (IFRS)

c) US Accounting Standards Codification (ASC)

d) Financial Accounting Standards Board (FASB)

Answer 1

The rules, standards and conventions that guide the preparation of financial accounting for US firms are called Generally Accepted Accounting Principles (GAAP).

Step-by-step explanation:

Generally Accepted Accounting Principles, commonly referred to as GAAP, are the rules, standards, and conventions that guide the preparation of financial accounting for US firms. These principles provide a framework for recording and reporting financial information accurately and consistently.

They are developed and maintained by the Financial Accounting Standards Board (FASB) and are widely recognized and followed in the United States.

For example, GAAP requires that financial statements are prepared using the accrual basis of accounting, where revenues are recognized when earned and expenses are recognized when incurred. This principle ensures that financial statements provide a fair and accurate representation of a company's financial position and performance.

The correct answer is a) Generally Accepted Accounting Principles (GAAP).