Final answer:
The standard for external financial reporting is the Generally Accepted Accounting Principles (GAAP), which ensures consistent and transparent financial reports for public companies in the U.S.
Step-by-step explanation:
The reporting standard for external financial reports is b) Generally accepted accounting principles (GAAP). This set of accounting principles provides a framework within which all public companies in the United States must prepare their financial statements. GAAP is designed to ensure consistency, transparency, and fairness in financial reporting, allowing investors, creditors, and the market to make informed decisions based on comparable and reliable financial information.
GAAP covers principles such as recognition, measurement, presentation, and disclosure, providing comprehensive guidance for a wide range of accounting scenarios. While GAAP is specific to the United States, there are other accounting standards, like the International Financial Reporting Standards (IFRS), which are used in many other countries.