Which organization defines GAAP for private sector entities?

The Financial Accounting Standards Board (FASB) is the organization responsible for establishing Generally Accepted Accounting Principles (GAAP) for private sector entities in the United States. FASB's role includes developing and issuing accounting standards that ensure consistency, transparency, and comparability in financial reporting, which are essential for stakeholders using financial statements to make informed decisions.

FASB's standards are crucial for companies as they navigate the complexities of financial reporting and strive to meet regulatory requirements. By adhering to these standards, private sector entities can enhance their credibility and reliability in the eyes of investors, creditors, and other market participants.

In contrast, other organizations mentioned in the options have different roles. For example, the Government Accountability Office (GAO) primarily focuses on auditing and evaluating government operations, while the Government Performance and Results Act emphasizes performance measurement and reporting in government sectors, not accounting principles. The Governmental Accounting Standards Board (GASB) establishes GAAP specifically for state and local government entities, not for the private sector. Understanding the distinct functions of these organizations clarifies why FASB is the correct answer in defining GAAP for private sector entities.