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).

---

Definitions:

Leverage

The use of borrowed capital or financial instruments to increase the potential return of an investment, or in business, the use of various techniques to maximize outcomes.

Ability to Generate Cash

The capacity of a business to convert activities or assets into liquid funds to meet short-term obligations and support operations.

Financial Strength

A term that refers to the financial stability and health of an organization, often assessed through metrics such as liquidity, solvency, and profitability.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.