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Generally Accepted Accounting Principles GAAP
       
 
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Generally Accepted Accounting Principles GAAP

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Generally Accepted Accounting Principles GAAP
Conventions, rules, and procedures that define accepted accounting practice, including broad guidelines as well as detailed procedures.
    
The basic doctrine was set forth by the Accounting Principles Board of the American Institute of Certified Public Accountants, which was superseded in 1973 by the Financial Accounting Standards Board (FASB), an independent self-regulatory organization. See Also Financial Accounting Standards Board.
    
GAAP are imposed on companies so that investors have a minimum level of consistency in the financial statements they use when analyzing companies for investment purposes. GAAP cover such things as revenue recognition, Balance Sheet item classification and outstanding share measurements. Companies are expected to follow GAAP rules when reporting their financial data via financial statements. If a financial Statement is not prepared using GAAP principles, be very wary!
    
It has to be kept in mind that GAAP is only a set of standards. There is plenty of room within GAAP for unscrupulous accountants to distort figures. So, even when a company uses GAAP, you still need to scrutinize its financial statements.
Posted by  ebs Finanzakademie GmbH, Catalyst Financial Partners LLC
 
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