Understanding GAAP Framework Characteristics

Very Easy Financial Reporting Standards Gaap Framework

Generally Accepted Accounting Principles (GAAP) are a set of accounting standards and guidelines that organizations adhere to when preparing their financial statements. One of the key objectives of GAAP is to promote consistency and comparability in financial reporting. Which of the following statements best describes a feature of GAAP?

GAAP allows companies to choose between different accounting methods without any restrictions.

GAAP provides a coherent framework of accounting standards and principles that must be followed.

GAAP is only applicable to public companies and has no relevance to private firms.

Hint

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