Generally accepted accounting principles?

A. derive their authority from legal court proceedings.
B. are fundamental truths or axioms that can be derived from laws of nature.
C. derive their credibility and authority from general recognition and acceptance by the accounting profession.
D.have been specified in detail in the FASB conceptual framework.

The answer would be “D”.

The term “generally accepted accounting principles” has a specific meaning for accountants and auditors. The AICPA Code of Professional Conduct prohibits members from expressing an opinion or stating affirmatively that financial statements or other financial data “present fairly… in conformity with generally accepted accounting principles,” if such information contains any departures from accounting principles promulgated by a body designated by the AICPA Council to establish such principles.

The AICPA Council designated FASAB as the body that establishes accounting principles for federal entities. The AICPA’s hierarchy of generally accepted accounting principles in Statement of Auditing Standards (SAS) No. 91, The Federal GAAP Hierarchy, governs what constitutes GAAP for U.S. government reporting entities. The hierarchy lists the priority sequence of sources that an entity should look to for accounting and reporting guidance.

FASB Accounting Standards Codification Pt.1 – Lynn Horowitz

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