Article — Generally Accepted Accounting Principles

Thanks for sharing this!

As a US investor, you want GAAP in your financial statements. These generally accepted accounting principles are the standards and procedures certified public accountants apply when preparing the financial statements on which you base investing decisions.

Image Source: Dave Dugdale via Wikimedia Commons

Image Source: Dave Dugdale via Wikimedia Commons

GAAP came into existence after the stock market crash of 1929 in order to restore investor confidence in US financial markets. The goal: Make financial information consistent and reliable from year to year. GAAP generally applies to companies whose stock you purchase on public exchanges, though the financial statements of smaller companies can also follow GAAP.

In the US, the Financial Accounting Standards Board sets GAAP standards. Though the US Securities and Exchange Commission has delegated authority for GAAP to the Financial Accounting Standards Board, the board is not a government entity, and the SEC maintains regulatory oversight.

GAAP has evolved over the years to meet the needs of investors in changing financial markets. As globalization increases, the next step is an integration with International Financial Reporting Standards, the framework of accounting principles used by most foreign countries.


You might also like these posts

Article – Preparing for Hurricane Season Image source: By Nilfanion , via Wikimedia Commons. The map shows the tracks of all tropical cyclones which formed worldwide from 1985 to 2005.The Atlantic hurricane season begins June 1. While the 2014 season is expected to be a mild one, mild doesn’t mean storm-free. Getting ready early is a good idea—and early preparati...
Article — Locked Out Image source: UK, public domain, via Wikimedia Commons What’s on your computer? Your manuscripts? Work? Photos? What would you do if you were denied access to those files—if you were locked out by rogue hackers? If you’re shaking your head because you think nothing on your computer is of value to hackers, consider th...
Article — Tax Identity Theft Awareness Week Image source: Taxes are scary enough, without adding tax identity theft to the mix. The costs—$3.6 billion a year according to an estimate by the US Treasury Inspector General for Tax Administration—are scary, too. Unfortunately, both tax ID theft and the costs are on the rise. The US Federal Trade Commission...
Article — Your 2013 Federal Income Tax Return Image source: Whether you’re a part- or full-time freelancer, receiving income means filing a tax return. Here are three things to keep in mind as you look back at your 2013 business activity. Dates: The IRS will begin accepting 2013 business returns on Monday, January 13, 2014. For individual returns, the da...

We write. Visit us in Carpenter Country, a magical place that, like our stories, is unreal but not untrue.

Posted in Articles Tagged with: ,