Question

An investor is studying a set of financial statements prepared for a company. He is considering buying some of its ownership shares. While studying the financial statements, he notices that they have been prepared in accordance with U.S. GAAP. Which of the following statements is true?

The rules and principles that make up U.S. GAAP have been the same now for over forty years.
The rules and principles that make up U.S. GAAP are consistent throughout the United States.
The rules and principles that make up U.S. GAAP are used consistently throughout the world.
The rules and principles that make up U.S. GAAP are the same as those used for income tax purposes.

Answer 1

U.S. GAAP is used consistently throughout the United States.

Step-by-step explanation:

The true statement regarding U.S. GAAP (Generally Accepted Accounting Principles) is that they are used consistently throughout the United States.

U.S. GAAP is a set of accounting rules and principles that guide the preparation of financial statements for companies in the United States. It ensures that financial statements are prepared in a standardized manner, making them comparable and reliable for investors and other stakeholders.

While U.S. GAAP is widely followed and respected in the United States, it is important to note that other countries may have their own accounting standards, such as IFRS (International Financial Reporting Standards).