Question

Advantages of one GAAP for all companies regardless of size or type of ownership:

Please include references.

Answer 1

Ans. : Advantages of one GAAP for all companies regardless of size and type of ownership are as follows:

* Financial statements can easily be compared between companies in different countries.

* Companies can easily expand their business at international level. If accounting principles are not same than in that case cost of complying with those principles is burden on companies.  

* Consistency will be maintained at the level of preparation of financial statements.

* It will build the trust of stakeholders in the companies as accounting principles will be worldwide same. Stakeholders are like government, investor, banks, employees, creditors, financial institutions etc.

* Principle of materiality will be followed which means full disclosure of all items which has an impact on financial reports and Auditors report.