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Published: 01-12-2019

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The Generally Accepted Accounting Principles (GAAP)

The Generally Accepted Accounting Principles, or GAAP, are the accounting principles, requirements, and procedures employed by companies in recording their financial statements (“Comprehensive guide…”, 2018). This principle is utilized to make certain that investors maintain a consistent level of monetary statements when trying to figure out which business to invest. The GAAP involves revenue identification, balance sheet entry classification, and outstanding share identification (“Development of GAAP”3, 2018). When recording their economic statements, U.S. law demands that all organizations release their economic statements to the public and also to different organizations that are publicly traded on stock exchanges.

The idelity Investments Firm is a nicely-recognized mutual fund investment company. The Fidelity Investment Firm makes excellent amounts of investments, that are worth billions, in companies that have been listed in the stock markets (“Financial Accounting Foundation”, 2018). GAAP are very crucial for Fidelity’s investment analysts. The Fidelity investment analysts locate monetary statements that have been prepared in accordance with GAAP and audited by an independent Certified Public Accountant (CPA) valuable (“Comprehensive guide…”, 2018). It is valuable to them because of its accuracy. These economic statements are prepared by the management and checked by the CPA. The CPA are honest and trustworthy. They have no purpose to lie since they will not gain anything from it. When the financial statements are ready in accordance with GAAP, it is guaranteed that all of the rules are followed and that they are correct.

There are many organizations that influence GAAP, which consist of the Monetary Accounting Standards Board (FASB), the American Institute of Certified Public Accountants (AICPA), the Securities and Exchange Commission (SEC), the Government Accounting Standards Board (GASB), the Public Firm Accounting Oversight Board (PCAOB), the International Accounting Requirements Board (IASB), and the Internal Income Service (IRS) (“Essentials of GAAP…”, 2017). The Monetary Accounting Requirements Board (FASB) is the main organization that is accountable for generating rules that require to be followed to be employed in accounting practice.

The American Institute of Certified Public Accountants (AICPA) is a expert association of the certified public accountant. It influences the accounting field by way of the acts of its senior technical committee. The Security and Exchange Commission (SEC) is the federal government agency with the authority to carry out accounting practices. These accounting practices are carried out on the businesses and businesses that supply their securities to the public. This is extremely crucial and has a great influence on the accounting practice, since with no it these practices would not be about to be perpetrated. The Governmental Accounting Standards Board (GASB) is an organization that supplies accounting standards to the state, and also the nearby governments (Wilkinson, 2017). The Public Company Accounting Oversight Board (PCAOB) is a government physique that was produced by the Sarbanes-Oxley Act. This organization registers public accounting firms and determines the standards that should be followed by firm auditors. It conducts inspections, investigations, and disciplinary proceedings of registered accounting firms if standards are not followed.

The International Accounting Requirements Board (IASB) is an organization that approves the international accounting standards. Lastly, the Internal Revenue Service (IRS) is the physique that administers the tax law rules, which is really helpful and important with the accounting practice (“Essentials of GAAP…”, 2017).
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