It doesn’t matter what size your business is, accurately tracking and presenting financial information is a complex piece of business ownership. When reporting financial information, it needs to be transparent, consistent and comparable. This is where generally accepted accounting principles or GAAP comes into play. Mark Dicus & Company is here to talk about what GAAP is, and how it can help business of all sizes.
GAAP Accounting Rules Explained
Over the years, the GAAP has evolved like many things in our society. For those of you that are familiar with GAAP, it is a set of accounting rules, requirements and practices that guides and shapes how financial information is presented. These guidelines are required for non-profit, profit and government entities. This makes it so that financial statements are presented in a way that makes it easier to compare one entity to those of another entity. The GAAP is in place to help profit and non-profits provide useful informations to their stakeholders, lenders and others with a vested interest.
Principles of GAAP Framework
There are several principles in place to standardize, define, and regulate the reporting of financial information.
– Regularity: Ensures all accounting adheres to strict GAAP standards
– Consistency: Accounting must be consistent and comparable each reporting period
– Sincerity: Must be committed accuracy and objectivity
– Permanence of Methods: Consistent accounting throughout the preparation of financial records
– Non-Compensation: Whether the company lost or gained, the company must report all performance without any debt compensation
– Prudence: No Speculation on financial entries so they are realistic and timely
– Continuity: Regardless of asset valuations, the entity will remain in business
– Periodicity: Accounting periods must be routine and consistent
– Materiality: All financial reports are based on factual information that honestly show the institution’s financial position and value of assets
– Utmost Good Faith: Everything reported is done so with truth and honesty
How to Stay Up to Date with GAAP Standards
We live in a world where regulations are constantly changing. This can make it difficult to keep up with it all. The GAAP is no different. It is important to stay up to date on any changes that are made to the GAAP standards. The best way for businesses to do this is to have an accountant in their corner that is on top of it. The GAAP is a rules based system that is widely used in the United States. Accountants in the US will have the tools in place that will keep them informed on any adjustments to these rules.
Bookkeepers, Accountants & More in Summerlin, North LV, Henderson, Lone Mountain Village & Greater Las Vegas, Nevada
As a business owner, it is vital that you have an accounting team like the professionals at Mark Dicus & Company in place to help keep your business on track. We will handle all of your financial reporting and ensure that we are following the GAAP standards. That way, you don’t have to think twice about it. Call us today!