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    GAAP

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    Hashim Khan
    GAAP refers to Generally Accepted Accounting Principles, which are the common set of accounting standards, procedures, and practices used to compile financial statements. GAAP includes authoritative standards set by organizations like the FASB in the US and IASB internationally. Financial statements submitted by publicly traded companies must meet GAAP standards to provide consistency for investors analyzing companies. GAAP covers revenue recognition, balance sheet classifications, and other financial reporting topics to standardize how companies report financial data.

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    GAAP

    Uploaded by

    Hashim Khan
    881 views6 pages
    GAAP refers to Generally Accepted Accounting Principles, which are the common set of accounting standards, procedures, and practices used to compile financial statements. GAAP includes authoritative standards set by organizations like the FASB in the US and IASB internationally. Financial statements submitted by publicly traded companies must meet GAAP standards to provide consistency for investors analyzing companies. GAAP covers revenue recognition, balance sheet classifications, and other financial reporting topics to standardize how companies report financial data.

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    GAAP refers to Generally Accepted Accounting Principles, which are the common set of accounting standards, procedures, and practices used to compile financial statements. GAAP includes authoritative standards set by organizations like the FASB in the US and IASB internationally. Financial statements submitted by publicly traded companies must meet GAAP standards to provide consistency for investors analyzing companies. GAAP covers revenue recognition, balance sheet classifications, and other financial reporting topics to standardize how companies report financial data.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    881 views6 pages

    GAAP

    Uploaded by

    Hashim Khan
    GAAP refers to Generally Accepted Accounting Principles, which are the common set of accounting standards, procedures, and practices used to compile financial statements. GAAP includes authoritative standards set by organizations like the FASB in the US and IASB internationally. Financial statements submitted by publicly traded companies must meet GAAP standards to provide consistency for investors analyzing companies. GAAP covers revenue recognition, balance sheet classifications, and other financial reporting topics to standardize how companies report financial data.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
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    At a glance
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    The key takeaways are that GAAP refers to the set of commonly accepted accounting principles, standards and procedures used to compile financial statements. It aims to provide consistency for investors to analyze companies. Some of the main components covered under GAAP include the accounting framework, financial statements, consolidated statements, revenue/expense recognition, assets, liabilities, equity etc.

    The main components that are covered under GAAP include the accounting framework, financial statements, consolidated final statements, business combinations, revenue recognition, expense recognition, assets, liabilities, equity, derivatives & hedging and other accounting & reporting topics like foreign currency translation, earning per share, related party transactions, segment reporting, discontinued operations, post balance sheet events and interim reporting.

    Some important points to note about GAAP include that when comparing financial statements over different years, any changes in GAAP need to be noted. GAAP only provides guidelines and not guarantees against fraudulent statements. GAAP compliant statements can still be incorrect if the auditing firm is provided wrong data by management.

    GAAP

    Definition
    • GAAP is the abbreviation of Generally Accepted Accounting Principle.

    • GAAP are the common set of accounting principles, standards and procedures
    that companies use to compile their financial statements.

    • GAAP are a combination of authoritative standards (set by policy boards) and


    simply the commonly accepted ways of recording and reporting accounting
    information.
    Related Information
    • In USA, GAAP standard are set by Financial Accounting Standards Board
    (FASB).

    • Outside the US, the equivalent of GAAP is IAS - International Accounting


    Standards - which is maintained by the International Accounting Standards Board
    (IASB).

    • Financial statements submitted to the SEBI by publicly traded companies are


    required to meet GAAP standards.
    Why GAAP?
    • 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!


    Important points
    • When comparing financial statements from different years, it is important to note
    any changes in GAAP over the intervening period.

    • Since GAAP is only a set of guidelines, it cannot guarantee financial statements


    are not fraudulent. So, even when a company uses GAAP, we still need to
    scrutinize its financial statements.

    • If company management provides the auditing firm with incorrect data, the
    resulting financial statements may be GAAP compliant yet still incorrect.
    Contents of GAAP
    • ACCOUNTING FRAMEWORK
    • FINANCIAL STATEMENTS
    • CONSOLIDATED FINAL STATEMENTS
    • BUSINESS COMBINATIONS
    • REVENUE RECOGNITION
    • EXPENSE RECOGNITION
    • ASSETS
    • LIABILITIES
    • EQUITY
    • DERIVATIVES & HEDGING
    • OTHER ACCOUNTING & REPORTING TOPICS
    -FOREIGN CURRENCY TRANSLATION
    -EARNING PER SHARE
    -RELATED-PARTY TRANSACTION
    -SEGMENT REPORTING
    -DISCONTINUED OPERATIONS
    -POST BALANCE SHEET EVENTS
    -INTERIM REPORTING
    Money Measurement Concept

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