What is the purpose of generally accepted accounting principles (GAAP) and the accounting cycle? Is it possible to deviate from GAAP and the accounting cycle and still prepare financial statements? Why? What are some possible consequences of this course of action? Cite your sources APA
The purpose of generally accepted accounting principles (GAAP) is to ensure that the financial reporting is transparent and consistent from one organization to another. GAAP serves as a common language among accounting and finance professionals,thereby allowing stakeholders to compare financial statements across corporations. It also minimizes the risk of unintentional errors through implementation of checks and safeguards and provides confidence to the users of financial statements.
The purpose of Accounting Cycle is to help the business keep its accounting records systematically and to report financial information as it shows the correct financial position of the organization.It leads to the accuracy of all financial records.
Yes, it is possible to deviate from GAAP and accounting cycle and still prepare financial statements. Due to number of compliance and rules to be followed the small businesses and private companies may deviate from GAAP as it may become expensive and burdensome to comply with GAAP requirements. Some companies may also deviate from GAAP to produce internal financial reports for the process of decision making as they feel the non-GAAP earnings are more accurate measure of performance. GAAP is mainly designed for the needs of large companies.
For example: EBITDA (Earnings before interest tax and depreciation and amortization) is a non-GAAP earnings measure calculated by adding back the non-cash expenses of depreciation and amortization to a firm's operating income. It allows focus on the outcome of operating decisions while excluding the impacts of non-operating decisions like interest expenses, tax rates, or large non-cash items like depreciation and amortization.
Possible consequences of Deviation from GAAP and accounting cycle are:-
What is the purpose of generally accepted accounting principles (GAAP) and the accounting cycle? Is it...
Accountants follow generally accepted auditing accounting standards and generally accepted accounting principles (GAAP). Distinguish between the GAAS and GAAP. What professional organization establishes the GAAS and what is its purpose? What professional organization establishes the GAAP? Can GAAS exist without GAAP and/or vice versa and why is this so? Do GAAS and GAAP have different agendas and why is each needed?
Generally Accepted Accounting Principles (GAAP) govern how... Measure and communicate financial information. Establish principles only for proprietorships. Prepare only the income statement sections Develop financial statements only for corporations Present financial statement for partnerships only accountants:
enerally Accepted Accounting Principles (GAAP) allow companies to choose any inventory costing method, although the consistency principle requires that they not switch between methods on a regular basis. However, many companies still change methods from one year to the next. Perform research on this topic in order to address the below questions. Make sure to cite your sources: Why is consistency important in the first place? What are some valid reasons companies may decide to switch methods? How does the...
1. What is Generally Accepted Accounting Principles (GAAP) and how does it affect accounting? 2. Discuss the concepts and assumptions of GAAP, .
2. Firms speak of the use of Generally Accepted Accounting Principles (GAAP). Why is this approach important and who assures that it is followed? (There are several parties involved) 3. What is accrual accounting and how does it differ from cash based accounting?
4- Explain the meaning of generally accepted accounting principles (GAAP). What body provides authoritative support for GAAP?
*Choose one of the main differences between generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS). *Fully explain the selected difference. *In addition, discuss how that difference impacts financial reporting. *Lastly, discuss which standard you think is more appropriate to apply to financial accounting and why.
Violating GAAP Why is it permissible to violate generally accepted accounting principles when preparing reports used by company management? give your own answer in a paragraph
-Comprehensive Income- present the provisions of this concept provided by GAAP (GENERALLY ACCEPTED ACCOUNTING STANDARD) present provisions provided by IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARD) are presented. -Restrictions of Retained Earnings- present the provisions of this concept provided by GAAP (GENERALLY ACCEPTED ACCOUNTING STANDARD) present provisions provided by IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARD) are presented -Comprehensive Income- provide the definition given by the GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) and the definition given by IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARD) -Restrictions of Retained...
Consider the following statement: Many people believe that the U.S. Generally Accepted Accounting Principles (GAAP) are a rules-based approach to setting standards, while the International Financial Reporting Standards (IFRS) are a principles-based approach. For your initial post, discuss the validity of this statement and give examples with academic support to justify your opinion.