The Importance of Gaap Essay

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The Importance of Generally Accepted Accounting Principles for Businesses Introduction Like most everything in life and in business those things with basic fundamental guidelines and principles tend to be the most successful. In life parents have certain guidelines they have for raising their children or establishing family budgets; in business Human Resource departments have guidelines they follow for hiring processes, project managers have flowcharts and decision making processes they use for making informed choices as to what steps to move to during the project life cycle. Therein lays the jist of Generally Accepted Accounting Principles. Accounting departments no matter the size or product of a business MUST have some sort of format to follow that allows for a detailed focus on arriving at the correct numbers on balance sheets, cash flow statements, and other important financial documents. By having sound GAAP’s established within a field allows many benefits for businesses as we will discuss later on. Also there are those out there that says there is no need to follow current established and generally accepted accounted principles and that they could end up costing money, we will look at one such argument also. So, let us take a look at what GAAP is how it works and what are some of the benefits using Generally Accepted Accounting Principles offers organizations and accounting departments. What is GAAP? You can find several definitions on what Generally Accepted Accounting Principles is and pretty much they all say the same just in different jargon. Fields The Essentials of finance and Accounting For Nonfinancial Managers briefly defines GAAP as “The FASB (Financial Accounting Standards Board) along with the entire accounting profession, has, over time, developed a series of rules called Generally Accepted Accounting Principles” (Fields, 2011). Hunkar
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