What Does it Mean for my Business?
If a company's management could record and report financial data as it saw fit, comparisons among companies would be difficult, if not impossible. Thus, financial accountants follow generally accepted accounting principles (GAAP) in preparing reports. These reports allow investors and other users to compare one company to another.
Accounting principles and concepts develop from research, accepted accounting practices, and pronouncements of regulators.
When one considers starting a business of their own, they may not actively choose a basis of accounting. However, if you consider to expand the question of whether to move to financial statements that conform to GAAP are bound to come up. Prepare for your future now - understanding and establishing your financial statements are important for your business.
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