Question

Identify the uses of generally accepted accounting principles (GAAP). A. Independent accountants use GAAP to determine the amount of bonuses to be paid to executives. B. Companies use GAAP when preparing financial statements. C. Government uses GAAP to appoint board members for public companies. D. Auditors need to be sure the financial statements are prepared in accordance with GAAP.

Answer 1

Answer:

The correct option is;

B. Companies use GAAP when preparing financial statements

Explanation:

Generally Accepted Accounting Principles (GAAP) are the guidelines with regards to the standards, principles, practices and procedures of financial statement compilation by accountants issued by the Financial Accounting Standards Board (FASB). It is a requirement that all publicly quoted companies make use of GAAP for their financial compilation.

GAAP comprises of the generally accepted accounting records reporting and recording methods as well as policy board standards of accounting procedures.