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Generally accepted accounting principles are: mandatory rules applied to both financial and management accounting. standards of...

Generally accepted accounting principles are:

mandatory rules applied to both financial and management accounting.

standards of accounting, a material departure from which may result in a qualified opinion issued by an auditor.

optional procedures for recording economic events.

the rules of accounting, prescribed exclusively by Federal regulatory agencies.

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Answer #1
  • Correct Answer is Option #2, Generally Accepted Accounting Principles (or GAAPs) are the standards of accounting, a material departure from which may results in a qualified opinion issued by an auditor.
  • GAAPSs are the basis on which universal accounting statements are prepared. They provide a basis at which the accounting is to be done.
  • Any departure from GAAP can cause serious issues and mis-statement in the financial statement data, and hence the same are audited by the auditor.
  • These are not for ‘managerial accounting’ (Option #1), or Optional (Option #3) or by any Federal agencies (Option #4)
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