What is the purpose of gaap?
“The main purpose of having GAAP is to assure consistency in accounting practices, not only within a company, but across all regulated companies. The SEC requires all publicly held companies to be audited at least annually by a Certified Public Accountant (CPA). The CPA assures the stockholders that they can count on the financial information from the company, because it is in compliance with GAAP. By preparing all financial information according to GAAP, • Management can depend on the records and make course corrections for their individual departments or the company as a whole for the betterment of the company. • Investors and lenders can make sound decisions based on the financial records of the company. • Stockholders and prospective stockholders get an accurate picture of the company’s financial health.
