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How to define GAAP?
GAAP or Generally Accepted Accounting Principlesare basically used for financial reporting purposes. There are some principles in this regard and they are:
1. Cost principle
2. Economic entity assumption
3. Matching principle
Revenue recognition principle
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Chief objectives of GAAP:
1. These principles jot down the transactions of a financial institution in a systematic way.
2. Thus, it measures out the profited amount of this firm.
3. It computes and estimate the probable amount of future earning.
4. Identify the liabilities and assets.
5. Complete legal procedure is also incorporatedinto this discipline.
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