What does FASB stand for, and what is its primary function?

The correct answer is that FASB stands for the Financial Accounting Standards Board, and its primary function is to develop accounting standards. FASB is a private-sector organization that establishes financial accounting and reporting standards for companies and nonprofit organizations within the United States. These standards are designed to ensure that financial statements are transparent, consistent, and comparable, which helps investors and other stakeholders make informed decisions.

The standards set by FASB are recognized as generally accepted accounting principles (GAAP). These principles serve as a guiding framework for preparing financial statements to reflect a company’s financial position accurately. By developing these standards, FASB plays a crucial role in improving the quality of financial reporting and fostering public confidence in the financial reporting process.