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

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the term GAAP. GAAP stands for Generally Accepted Accounting Principles, which are a set of rules and standards used in financial accounting to ensure consistency, reliability, and comparability of financial statements.
2. Step 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 maintaining GAAP in the U.S.
3. Step 3: Eliminate incorrect options by analyzing the descriptions provided. For example, GAAP does not stand for Governmental Accounting and Auditing Practices, nor is it overseen by the International Accounting Standards Board (IASB).
4. Step 4: Similarly, GAAP does not stand for General Accounting and Auditing Policies, nor is it overseen by the Securities and Exchange Commission (SEC). The SEC enforces compliance with GAAP but does not oversee its development.
5. Step 5: Finally, GAAP does not stand for Generally Accepted Auditing Principles, nor is it overseen by the Public Company Accounting Oversight Board (PCAOB). The PCAOB focuses on auditing standards, not accounting principles.