Generally accepted accounting principles
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Generally accepted accounting principles (GAAP) are the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards or standard accounting practice. These include the standards, conventions, and rules that accountants follow in recording and summarizing and in the preparation of financial statements. Many businesses choose to "opt out" of GAAP practices as they operate on a cash basis, as opposed to an accrual basis. A comparison would be the way that most people balance their checkbooks: when a check is written, its amount is deducted from the total balance even though the funds have not yet left the account. Financial decisions made after the check is written are based on the balance after the check is deducted.
Examples
International
Domestic examples
- China - Chinese Accounting Standards (Zhōngguó qǐyè kuàijì zhǔnzé 中国企业会计准则)
- Canada - Generally Accepted Accounting Principles
- France - Generally Accepted Accounting Practice (Plan Comptable Général)
- Germany - Generally Accepted Accounting Practice (Grundsätze ordnungsmäßiger Buchführung)
- India - Generally Accepted Accounting Practice
- Russia - Generally Accepted Accounting Practice (RAP)
- United Kingdom - Generally Accepted Accounting Practice
- United States - Generally Accepted Accounting Principles
Global standardization
Many countries use or are converging on the International Financial Reporting Standards (IFRS) that were established and are maintained by the International Accounting Standards Board. In some countries, local accounting principles are applied for regular companies but listed or large companies must conform to IFRS, so statutory reporting is comparable internationally.
All listed and grouped EU companies have been required to use IFRS since 2005, Canada moved in 2009,[1] Taiwan in 2013,[2] and other countries are adopting local versions.[3][4]
In the United States, while "...the SEC published a statement of continued support for a single set of high-quality, globally accepted accounting standards, and acknowledged that IFRS is best positioned to serve this role..."[5] progress is less evident.[5][6]
See also
- Center for Audit Quality (CAQ)
- Constant item purchasing power accounting
- Philosophy of accounting
- Statutory accounting principles for insurance companies in the US
References
- ↑ "AcSB Confirms Changeover Date to IFRSs". Canadian Institute of Chartered Accountants. 13 February 2008. Retrieved 8 August 2009.
- ↑ "IFRS accounting measures to take effect for all listed companies in Taiwan in 2013", Ted Chen, The China Post, January 1, 2013
- ↑ "New Zealand International Financial Reporting Standards 2007-2014"
- ↑ "Financial reporting framework in Australia", Deloitte
- 1 2 "IFRS: Current situation and next steps", pwc.com
- ↑ "New mechanisms eyed by FASB, IASB in long march toward global comparability", Ken Tysiac January 10, 2013, journalofaccountancy.com