Answer to Question 1
The Financial Accounting Standards Board (FASB) is a private board that oversees the practice of financial accounting in the United States. One of its most important functions is the development and interpretation of generally accepted accounting principles (GAAP). Through GAAP, the FASB aims to ensure that financial statements are:
Relevant: They must contain information that helps a user understand a firm's financial performance and condition.
Reliable: They must provide information that is objective, accurate, and verifiable.
Consistent: They must provide financial statements based on the same core assumptions and procedures over time; if a firm introduces any significant changes in how it prepares its financial statements, GAAP requires it to clearly identify and describe these changes.
Comparable: They must present accounting statements in a reasonably standardized way, allowing users to track the firm's financial performance over a period of years and compare its results with those of other firms.
Answer to Question 2
A
