6 Who creates Generally Accepted Accounting Principles GAAP

6. Who creates Generally Accepted Accounting Principles (GAAP)? Why are there several boards responsible for GAAP?

Solution

Financial accounting standards board FASB created the GAAP called generally accepted accounting principles.

GAAP is not mandatorily to be followed by every company, but Securities exchange commission SEC mandates every listed company need to follow the standards setby FASB as GAAP.

Financial accounting standards advisory councils FASAC advises FASB to on all the related matters of GAAP.