Why must accounting report be prepared according to specific procedures (GAAP)? Should we allow businesses some...

Why must accounting report be prepared according to specific procedures (GAAP)? Should we allow businesses some flexibility or creativity in preparing financial statements.

Solutions

Expert Solution

Generally Accepted Accounting Principles (GAAP) refers to refers to the set of accounting principles, standards and principles that companies need to follow while compiling their financial statements. The accounting statements needs to be prepared as per GAAP guidelines because it makes the information reliable and also maintains consistency in financial reports. If every company prepares its own report it would not be possible to evaluate reports, compare companies, and interpret the reported information. GAAP reporting style also makes it easier for the investors to analyze and extract useful information. It also helps in comparison of financial information across different companies.

Thus, considering the benefits of the GAAP guidelines, it is advisable not to allow businesses some flexibility or creativity in preparing financial statements. Their should be uniform rules for all companies.

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

In financial accounting, why is reporting control procedures required (in governmental and GAAP reporting requirements) and...

In financial accounting, why is reporting control procedures required (in governmental and GAAP reporting requirements) and what information does it reveal about the company?

1.According to GAAP, to be useful, accounting information must be all of the following EXCEPT: Relevant...

1.According to GAAP, to be useful, accounting information must be all of the following EXCEPT: Relevant Reliable Subjective Comparable 2. An increase in the cost of goods sold would cause a company’s profit margin to a. increase. b. decrease. c. remain unchanged. d. Must be offset by an increase in the selling price. 3. Which of the following is not an element of internal control? Assigning responsibilities to individuals who have the authority to administer them...

1. Per GAAP, if we borrow some of the project’s costs in a specific loan and...

1. Per GAAP, if we borrow some of the project’s costs in a specific loan and get the rest from cash that we have from the other general borrowings we have made in the past, what interest rate or rates do we use? 2. Per GAAP, this project is unique. It is one project with two parts—a hotel and a small retail area with shops. The hotel is going to take three years to complete and the retail shops will...

How does GAAP standardize accounting records across companies? Why are private businesses not required to follow...

How does GAAP standardize accounting records across companies? Why are private businesses not required to follow GAAP? Which issues may have occurred before rules for accounting documentation were standardized? Who maintains GAAP rules? Why is this separate from the responsibilities of government? What is the difference between preparing reports without GAAP? What are some issues that GAAP does not address?

Many industries have Non-GAAP presentations specific to that indsutry? Why must an analyst be careful when...

Many industries have Non-GAAP presentations specific to that indsutry? Why must an analyst be careful when using this information?

Many industries have Non-GAAP presentations specific to that industry. Why must an analyst be careful when...

Many industries have Non-GAAP presentations specific to that industry. Why must an analyst be careful when using this information?

how does GAAP relate to the world of accounting? Why do we need uniformity?

1. An auditor's report on financial statements prepared in accordance with generally accepted accounting principles should...

1. An auditor's report on financial statements prepared in accordance with generally accepted accounting principles should include all of the following except: an opinion as to whether the basis of accounting used is appropriate under the circumstances. a statement that the basis of presentation is a basis of accounting other than generally accepted accounting principles if management wants to do it reference to the note to the financial statements that describes the basis of presentation as GAAP. an opinion as...

PLEASE ANSWER THE QUESTIONS BELOW according to international accounting Question 1,2,3,4,12,13 should be prepared in writing...

PLEASE ANSWER THE QUESTIONS BELOW according to international accounting Question 1,2,3,4,12,13 should be prepared in writing Discuss four stages of financial statement analysis. Why at each step is analysis in a cross-border context more difficult than in a single-country? Discuss special issues that you think important in analyzing financial statements of foreign companies. Discuss possible adjustable and non-adjustable differences in international financial statement analysis. How will you make general assessment of a countries accounting quality? Discuss general structure of form...

1.) Compliance to what? 2.) Why must/should businesses comply? 3.) In light of the fact there...

1.) Compliance to what? 2.) Why must/should businesses comply? 3.) In light of the fact there was already an entire volume of law regarding compliance and reporting why then did we have to come up with SOX?

Subjects