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What is GAAP and its Importance?

GAAP is used to manage all the financial statements of an Organization or Company. GAAP provides comparability, relevancy, consistency, etc. In this PPT you will learn about GAAP & its importance.

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What is GAAP and its Importance?

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  1. A Full Guide on GAAP (Generally Accepted Accounting Principle)

  2. What is GAAP? GAAP stands for Generally Accepted Accounting Principles that is defined as a set of rules that encompass the details, and legalities of business and corporate accounting. GAAP is used in the United States to organize, present, and report financial statements of an Organization.

  3. Basic Objectives of US GAAP The main objectives of US GAAP are- 1- The information should be related to economic resources as well as changes occurring in them. 2- It should be helpful in making financial and long-term decisions 3- The information provided by US GAAP should be helpful in maintaining records. 4- The information should be helpful to the creditors and potential investors in order to evaluate the amounts, timings, etc.

  4. Importance of GAAP The main importance of US GAAP is- 1- Comparability GAAP enhances the comparability of all the financial statements. Through GAAP all the organizations or companies are now able to compare their financial statements in different time periods. GAAP also helps an organization to optimize their operations based on the comparability of financial statements.

  5. 2- Consistency GAAP uses the same accounting principle every time that helps in promoting consistency and usability of financial statements. These consistency helps an organization to make their business go with the flow. With the helps of GAAP businesses make it easier for stakeholders to evaluate financial data. 3- Relevance GAAP helps the organization to maintain their financial status. It provides standards for recording recognizable transactions that also help a user to take and make effective decisions. GAAP also helps to make financial reporting accurate and relevant as possible.

  6. 4- Reliability GAAP also helps to make financial reporting more reliable for investors, owners, and stakeholders. Reliable statements also help management to make better decisions. GAAP provides reliability to all the Organizations.

  7. Generally Accepted Accounting Principle

  8. Indian GAAP and US GAAP

  9. Follow Us Company: Affluent Financial Services LLC Email Id:info@affluentcpa.com Website:https://www.affluentcpa.com/

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