Overview
Generally Accepted Accounting Principles (GAAP) are essential for ensuring that financial statements are prepared consistently and transparently. These principles guide accountants in recording and reporting financial information, which is crucial for stakeholders like investors and regulators. Unde...
Key Terms
Example: A company recognizes revenue when a sale is made, not when payment is received.
Example: If a company uses straight-line depreciation, it should continue to use it in future periods.
Example: A $1,000 expense may be immaterial for a large corporation but material for a small business.
Example: A company must disclose any pending lawsuits that could affect its financial position.
Example: The main financial statements include the balance sheet, income statement, and cash flow statement.
Example: Many countries require companies to prepare financial statements according to IFRS.