Question

Discuss "generally accepted accounting principles," or GAAP. How do accounting principles become "generally accepted," and how are accountants made aware of these principles? What are the negative consequences, if any, that an account can expect who fails to follow GAAP?

Answer 1

GAAP is a set of principles hinged on the following OBJECTIVITY,MATERIALITY, CONSISTENCY AND PRUDENCE. GAAP IS PREPARED BY FASB(FINANCIAL ACCOUNTING STANDARDS BOARDS).

Accounting standards become generally accepted when they meet those four principles, which means the Financial statements must be objective, prudent, consistent and materialistic.

Accountants are made aware of these principles through Trainings, Surveillance activities,through audits etc.

If the principles of GAAP is not followed the accounts of that company will not be accepted.

The Accountant will be held liable for the company's losses.

The license of the Certified public accountant (CPA) can be withdrawn.

Explanation:GAAP is a set of principles hinged on the following OBJECTIVITY,MATERIALITY, CONSISTENCY AND PRUDENCE. GAAP IS PREPARED BY FASB(FINANCIAL ACCOUNTING STANDARDS BOARDS).

Accounting standards become generally accepted when they meet those four principles, which means the Financial statements must be objective, prudent, consistent and materialistic.

Accountants are made aware of these principles through Trainings, Surveillance activities,through audits etc.

If the principles of GAAP is not followed the accounts of that company will not be accepted.

The Accountant will be held liable for the company's losses.

The license of the Certified public accountant (CPA) can be withdrawn.