THE IMPORTANCE OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP)
The Importance of GAAP
Why do we need Generally Accepted Accounting Principles (GAAP)? This short video provides the answer for those who are new to the work of the FAF, the FASB, and the GASB.Â
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About GAAP
Financial reporting (balance sheets, income statements, financial notes, and disclosures) is the language we use to communicate information about the financial condition of a company, a not-for-profit, or a state or local government. Generally Accepted Accounting Principles (GAAP) are the rules that determine how that language is written.
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GAAP and Public Companies
Capital markets depend on companies being able to supply the market with high-quality financial information to enable investors to make better decisions.
>> MoreABOUT GAAP
Financial reporting (balance sheets, income statements, financial notes, and disclosures) is the language we use to communicate information about the financial condition of a company, a not-for-profit, or a state or local government.
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Capital markets depend on companies being able to supply the market with high-quality financial information to enable investors to make better decisions.
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Many private companies, especially those seeking to get loans, expand their business, or considering going public, make the decision to use GAAP-based financial reporting.
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Preparing a financial report in compliance with GAAP establishes greater accountability and transparency between a state or local government and its citizens, legislative and oversight bodies, investors, and creditors.
>> MoreGAAP AND NOT-FOR-PROFITS
Not-for-profit organizations often find that there are many advantages to using GAAP—especially those seeking to expand their capacity to provide services.
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