GAAP so that it contains no material misstatements. That means that it is reported according to U.S. This textbook is an exploration of those accounting principles that serve as the foundation for financial accounting in this country 1.īased on coverage here, students who seek to become accountants can learn to report financial information that is fairly presented. Thus, the financial information to be distributed by an organization in the form of financial statements is structured according to U.S. A proper likeness can be portrayed and communicated. GAAP, even the most complex financial information can be conveyed successfully. If both the accountant and the decision maker understand U.S. GAAP to arrive at an appropriate resolution, one that results in fair presentation. When faced with a reporting issue, such as a lawsuit, the accountant consults U.S. GAAP) has been created in the United States over many decades to provide authoritative guidance and standardization for financial accounting. When faced with complexity, how does the financial accountant know what reporting guidelines to follow? How does a decision maker looking at reported information know what reporting guidelines have been followed?Īnswer: A significant body of generally accepted accounting principles (frequently referred to as U.S. For example, assume that a reporting organization encounters an uncertainty (such as a lawsuit) and is now preparing financial information to portray the reality of that event. They provide the standard guidance necessary for achieving effective communication. Question: Rules and principles exist within financial accounting that must be followed. GAAP to International Financial Reporting Standards (IFRS). Discuss the advantages and the possibility of switching from U.S.Understand the role played by the Financial Accounting Standards Board (FASB) in the ongoing evolution of U.S.GAAP to the development of a capitalistic economy. GAAP) and the benefits that these rules provide. generally accepted accounting principles (U.S.
At the end of this section, students should be able to meet the following objectives:
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