Accounting principles
Respond to the following in a minimum of 175 words:
Discuss “generally accepted accounting principles,” or GAAP. How do accounting principles become “generally accepted,” and how are accountants made aware of these principles? What are the negative consequences, if any, that an account can expect who fails to follow GAAP?
2. Generally accepted accounting principles or GAAP are procedures that have been created by a group of rule makers with authority in the accounting field or principles that have been established as best practices over time. According to Kieso, Weygandt, and Warfield (2016), the GAAP is made up of over 2,000 documents that have been created over the past 70 years. The GAAP documents can be found in the Financial Accounting Standards Board Accounting Standards Codification (“the Codification”), developed by the Financial Accounting Standards Board (FASB). There is also an online version of the Codification called the Financial Accounting Standards Board Certification Research System (CRS). Accountants are required to use the Codification and CRS to learn the GAAP principles. When an accountant doesn’t follow GAAP principles, it could lead to the company being open to fraudulent activities. The Sarbanes-Oxley Act was passed to increase oversight and reduce poor reporting practices (Kieso, Weygandt, & Warfield, 2016, p. 16). An accountant could face charges of malpractice due to negligence if they fail to follow GAAP (Patrick Malone & Associates, P.C., 2019).
References:
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2016). Intermediate Accounting (16th ed.). Retrieved from The University of Phoenix eBook Collection database.
Patrick Malone & Associates, P.C.. (2019). Failure to comply with GAAP and GAAS standards. Retrieved from https://www.patrickmalonelaw.com/focus-areas/accounting-legal-malpractice/failure-to-comply-with-gaap-and-gaas-standards/
Respond to the following in a minimum of 175 words
3.Generally Accepted Accounting Principles (GAAP) is a set of principles, policies and procedures accounting firms and their accountants must follow when gathering their financial statements. These principles helps improve overall clarity of any financial information in a company. GAAP must be complied with at all times so that anyone going over a companies financial statement has clarity of any financial statement being read. GAAP also facilitates the cross-comparison of financial information across different companies. GAAP covers revenue, recognition, balances sheet classification and outstanding measurements. GAAP must be followed when a company distributes its financial statements outside of the company, along with any corporation whose stock is publicly traded. After reading it was bought to my attention that GAAP is a set of standards to help principles work and improve the transparency in financial statement work. Its doesn’t mean that all statements are free from errors that can sometime mislead investors. So just because a company uses GAAP doesn’t mean those statements should be overlooked carefully. I thought this information was important because I am just learning about GAAP and if I were doing research I may just believe any financial statement presented to me not knowing that some of the information could be distor
Answer preview to accounting principles
APA
626 words