Match each of the numbered descriptions 1 through 5 with the term or phrase it best reflects

Match each of the numbered descriptions 1 through 5 with the term or phrase it best reflects. Indicate your answer by writing the letter A through H for the term or phrase in the blank provided.

An assessment of whether financial statements follow GAAP.

2. Amount a business earns in excess of all expenses and costs associated with its sales and revenues.

3. A group that sets accounting principles in the United States.

4. Accounting professionals who provide services to many clients.

5. Principles that determine whether an action is right or wrong.

The Correct Answer and Explanation is :

Here are the correct answers:

1. An assessment of whether financial statements follow GAAP. → D. Audit
2. Amount a business earns in excess of all expenses and costs associated with its sales and revenues. → F. Profit
3. A group that sets accounting principles in the United States. → G. Financial Accounting Standards Board (FASB)
4. Accounting professionals who provide services to many clients. → E. Public Accountants
5. Principles that determine whether an action is right or wrong. → B. Ethics

Explanation

1. Audit (D)
   An audit is an independent examination of financial statements to ensure they comply with Generally Accepted Accounting Principles (GAAP). Audits are conducted by external or internal auditors to provide credibility to financial reports and assure stakeholders that financial information is accurate.
2. Profit (F)
   Profit refers to the financial gain obtained when total revenues exceed total expenses. It is a key measure of a business’s success and is calculated as revenue minus expenses, including operating costs, taxes, and other obligations.
3. Financial Accounting Standards Board (FASB) (G)
   FASB is the organization responsible for establishing accounting standards in the United States. It issues GAAP guidelines, ensuring consistency and transparency in financial reporting, which helps investors, regulators, and stakeholders make informed decisions.
4. Public Accountants (E)
   Public accountants provide accounting, tax, and financial consulting services to multiple clients rather than working for a single company. They often work for accounting firms and may perform audits, tax preparation, and advisory services.
5. Ethics (B)
   Ethics are moral principles that guide behavior in accounting and business practices. Ethical standards ensure integrity, honesty, and fairness in financial reporting, helping prevent fraud and unethical conduct.