About GAAP

While many businesses assume that accountants of the Generally Accepted Accounting Practices are required and that they are untouchable, nothing could be further from the truth. Everything is a matter of interpretation, and GAAP is no different. First, it allows the GAAP other methods for certain expenses and yields in some specialized types of businesses. In addition, standard methods require that decisions on the timing of revenue and expenditure for the registration, or require to quantify the main factors. The decision on the timing of revenue and expenditure and share require specific values ​​to these factors, estimates and interpretations.

The mission of GAAP, in recent years, the accounting standardize to ensure consistency across all business areas. However, other methods have some basic business expenses are allowed. There is no test to determine whether a method is preferable to another. A company is free to choose the desired method. But you must choose wisely the cost method of selling, depreciation and amortization for help.

For other charges and income from the sale, the method adopted by the accounting, any alternative method. However, a company has a good amount of latitude in actually implementing the methods. A company has conservative accounting and other companies used the methods of a liberal. The end result is a greater diversity among firms in their measure of earnings and financial statements to be expected, since GAAP have developed since 1930.

GAAP Statement of Financial Accounting Standards Board (FASB) has 1000 pages now. And they do not even understand the rules and regulations issued by the federal government legal jurisdiction over financial reporting and accounting of public companies in the property - the Securities and Exchange Commission (SEC).