History of GAAP – How GAAP Was Formulated? The term “generally accepted” indicates either that an authoritative accounting rule-making body has established a principle of reporting in a given area or that over time a given practice has been accepted as appropriate because of its universal application.Īlthough principles and practices continue to provoke debate and criticism, most financial community members recognize them as the standards that, over time, have proven to be most useful. This common set of standards and procedures is generally accepted by accounting principles (GAAP). It would be impossible to prepare statements that could be compared and thus creating chaos in the business and financial world. Otherwise, each economic entity would have to develop its standards.įurther, readers of financial statements would have to familiarize themselves with every company’s peculiar accounting and reporting practices. The accounting profession has attempted to develop a set of generally accepted and universally practiced standards. Users expect these statements to present the company’s financial operations fairly, completely, and clearly. To meet these needs and satisfy management’s fiduciary reporting responsibility, companies prepare a single set of general-purpose financial statements. The main dispute in setting accounting standards is, “Whose rules should we play by, and what should they be?” The answer is not nearly clear.įinancial accounting statement users have coinciding and conflicting needs for information of various types. 6 Accounting Constraints According to GAAP.5 Basic Accounting Principles or Accounting Conventions in GAAP.4 Basic Accounting Concepts or Accounting Assumptions.GAAP Alternative – IFRS (International Financial Reporting Standards).
Groups, Organizations, And Regulatory Body That Shaped Generally Accepted Accounting Principles (GAAP).History of GAAP – How GAAP Was Formulated?.
0 kommentar(er)
