The Body of Rules and Procedures That Guide the Measurement

question 13

Multiple Choice

The body of rules and procedures that guide the measurement and communication of financial accounting information in the United States is known as:

• A)Standards of Professional Compliance (SPC).
• B)Generally Accepted Accounting Principles (GAAP).
• C)Generally Accepted Auditing Standards (GAAS).
• D)Rules of Financial Reporting (RFR).

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Definitions:

Basis

The amount of an investment in property for tax purposes; used to calculate gain or loss on a sale or other disposition of the property.

Gain Recognized

The profit realized from the sale or exchange of an asset, which must be reported for tax purposes.

Involuntary Conversion

Involuntary conversion is the process whereby property is destroyed, stolen, condemned, or disposed of under the threat of condemnation, and the owner receives compensation or insurance recovery.

Reinvested

The act of using dividends, interest, or profits from an investment to purchase additional shares or units of that investment.