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Generally accepted accounting principles encompass the conventions, rules and procedures necessary to define accepted accounting practice at a particular time generally accepted accounting principles include not only broad guidelines of general application, but also detailed practices and procedures. These principles help ensure that financial information is presented fairly and consistently, reducing the risk of errors, fraud, and misinterpretation. It has a wider scope than accounting as it is the route to the accounting process.
In 1970, the accounting principles board of aicpa also emphasised that the function of accounting is to provide quantitative information, primarily financial in nature, about economic entities, that is intended to be useful in making economic decisions. Gaap is a framework of accounting rules and standards that companies must follow when preparing financial statements They ensure consistency and transparency in financial statements, making it easier for stakeholders to interpret and compare data.
After studying this chapter you will be able to
State the meaning and need of accounting Discuss accounting as a source of information Identify the internal and external users of accounting information Explain the objectives of accounting
Describe the role of accounting Explain the basic terms used in accounting. Generally accepted accounting principles (gaap) are a set of standardized accounting rules, procedures, and guidelines that companies must follow when preparing their financial statements Gaap ensures that financial reporting is consistent, transparent, and comparable across different organizations and industries.
Theortical framework 1.1 introduction in this unit, we shall discuss the functions, branches, advantages,
Imitations, and bases for accounting In this unit, we also intend to elaborate on the need for accounting and then discuss the natur 1.2 need for accounting le. Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events, which are, in part at least, of a financial character, and interpreting results thereof.
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