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Generally Accepted Accpunting Principle or GAAP
The American Institute of Certified Public Accountant (AICPA) elaborates financial accounting theory and commonly accepted accounting principles as follows:
Financial statements are the products of procedure in that a large volume of data about aspects of the economic activities of an enterprise are accumulated, analysed and reported. The procedure should be carried out in accordance along with commonly accepted accounting principles. Generally accepted principles incorporate the consensus at a particular time as to that economic resources and obligations should be recorded as assets and liabilities through financial accounting, that change in assets and liabilities should be recorded, while these changes should be recorded and how the changes in assets and liabilities should be measured. GAAP also lays emphasis on what information should be disclosed and how it should be disclosed and which financial statements should be prepared.
Generally Accepted Accounting Principles (GAAP) encompasses the convention, rules and procedures essential to define accepted accounting practice at a particular time. GAAP involved not only wide guidelines of common application, but also detailed practices & procedures.
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