Which of the following best describes GAAP and the organization responsible for overseeing its development in the United States?

• A. GAAP stands for Generally Accepted Auditing Principles and is overseen by the Public Company Accounting Oversight Board (PCAOB).
• B. GAAP stands for Governmental Accounting and Auditing Practices and is overseen by the International Accounting Standards Board (IASB).
• C. GAAP stands for Generally Accepted Accounting Principles and is overseen by the Financial Accounting Standards Board (FASB).
• D. GAAP stands for General Accounting and Auditing Policies and is overseen by the Securities and Exchange Commission (SEC).

Answer: (C)

Verified step by step guidance

1. Understand the term GAAP: GAAP stands for Generally Accepted Accounting Principles. It is a set of rules and standards used in financial accounting to ensure consistency, transparency, and comparability of financial statements.
2. Identify the organization responsible for overseeing GAAP in the United States: The Financial Accounting Standards Board (FASB) is the primary organization responsible for developing and overseeing GAAP.
3. Eliminate incorrect options: Review each option provided in the problem and eliminate those that incorrectly define GAAP or misidentify the overseeing organization.
4. Focus on the correct definition: The correct description of GAAP is that it stands for Generally Accepted Accounting Principles and is overseen by the Financial Accounting Standards Board (FASB).
5. Verify your understanding: Ensure that you understand why the other options are incorrect (e.g., PCAOB oversees auditing standards, not GAAP; IASB oversees international standards, not U.S. GAAP; SEC enforces GAAP but does not develop it).