What organization establishes Generally Accepted Accounting Principles (GAAP)?

The Financial Accounting Standards Board (FASB) is the organization responsible for establishing Generally Accepted Accounting Principles (GAAP) in the United States. FASB's role is crucial as it develops and improves financial reporting standards that govern how financial statements should be prepared and presented. The principles established by FASB are designed to ensure transparency, consistency, and comparability in financial reporting, which is essential for investors, regulators, and other stakeholders who rely on financial statements to make informed decisions.

While other organizations play significant roles in the broader accounting landscape, they serve different functions. The International Accounting Standards Board (IASB) develops International Financial Reporting Standards (IFRS), which are used in many countries outside the U.S. The Governmental Accounting Standards Board (GASB) focuses on accounting standards for state and local governments. The American Institute of CPAs (AICPA) provides resources and guidance for accountants and oversees various professional accounting designations but does not set GAAP. Hence, FASB is the correct entity associated with the establishment of GAAP in the U.S.