GAAP: The rules for financial reporting.

BY:MOHAMMAD WAHID ABDULLAH KHAN

Summary: The ordinary situate of accounting principles, standards and procedures that companies use to assemble their financial statements. GAAP are a mixture of trustworthy standards and merely the frequently accepted traditions of recording and reporting accounting information

Introduction: Generally accepted accounting principles (GAAP) is the outlined, guidelines and most important rules of standards format for recording & reporting all the financial transaction in any organizations.

In extra generally accepted accounting principles (GAAP) is a set of rules, conventions, standards and procedures, established by the financial accounting standards board for recording and reporting financial information.

What Does Generally Accepted Accounting Principles (GAAP) indicates?

The ordinary locate of accounting ethics, principles and dealings that companies use to accumulate their financial statements. Generally Accepted Accounting Principles (GAAP) is a mixture of dependable values (put by policy boards) and basically the usually traditional conduct of recording and reporting accounting information.

While you have something to do with the financial reporting of a company or government being, you should recognize the principles of GAAP. Generally accepted accounting principles (GAAP) is implemented through measurement principles and revelation principles. Measurement principles recognize and decide the timing and basis of items that enter the accounting cycle and impact the financial statements, such as the period in which transactions will be recorded. Disclosure principles determine what exact numbers and other information are essential to be presented in financial statements.

When arranging financial statements prepared using GAAP, most American companies and other business unites use a lot of rules of how to report business transactions or dealings based upon the different GAAP rules. This affords for uniformity in the reporting of companies and businesses so that financial analysts, Banks, Shareholders and the SEC can have all reporting companies preparing their financial statements using the same rules and reporting procedures. There are general rules and impressions that administer the ground of accounting. These general rules referred to as basic accounting principles and guidelines form the foundation on which more exhaustive, complex, and legalistic accounting rules are based. For example, the Financial Accounting Standards Board (FASB) uses the basic accounting principles and guidelines as a basis for their own detailed and comprehensive set of accounting rules and standards

Although it is not written in law, the U.S. Securities and Exchange Commission (SEC) entail publicly traded companies and other regulated companies to follow GAAP for financial reporting. Although slighter companies are not required to use GAAP, there are confident situations, such as obtaining credit or seeking investors, which require, by contract, those companies to also follow GAAP when preparing their financial statements reporting,

Conclusion: The rules and procedures for reporting under GAAP are complex and have developed over a long period of time. Presently there are more than 150 "pronouncements" as to how to account for different types of transactions, ranging from how to report standard income from the sale of goods, and its connected inventory values, to accounting for inducement stock option distributions. By using reliable principles, all companies reporting below GAAP report these transactions on their financial statements in a dependable way.

About the Author

MOHAMMAD WAHID ABDULLAH KHAN

S/O MOHAMMAD SAADULLAH KHAN

Dhaka, Bangladesh

Home page: http://wahidbd.page4.me

Mr. Mohammad Wahid Abdullah Khan is the Chief financial officer (CFO) of Orient Polymer Group (former Project director of “Max Textiles Ltd” from May 2010 to March 15, 2011). Prior to that he had completed over ten (10) years in various fields of Business like - Accounts, Finance, Internal & External Audit, project budgeting and project costing related positions in some of the largest group companies & the join venture companies in Bangladesh.

He consults about small- medium business owners and services professionals, business consulting service and project process. He is most experience in Financial Risk Assessment, Financial analysis, Financial Advising and Project Cost Analysis. He is a co- author of “The complete performance management”, Mr. Khan has written more than 200 articles & case studies which have published in different international journals. Such as Business, finance, personal finance, international finance, auditing, Risk assessment topic and performance & industrial related,

Mr. khan’s most popular articles is  “WAK” Model - The way of best solution for an organization internal audit process,( 1st,2nd,& 3rd part)  “WAK” Model”- for successful financial resource , “Wahid khan”- cost analysis, Wahid theory – the key of dynamic series for successful financial consulting, Wahid techniques – the Significance and dependability manner for Performance audit(1st,2nd,& 3rd part) Wahid’s Opinion - non-conformity among the performance audit and financial audit, Wahid’s view- The cogent task and the confront of financial/economic analysis in the modern business decision making , Wahid’s outlook - The Business Financial Analysis Should Be Included several required Documents with the analysis report or plan, WAHID’S JUDGMENT- difference strategic plan as opposed to an operational plan ,WAHID’S METHOD– the charismatic and fruitful guideline for financial investment decision making ,WAHID’S MEASURE - the influential and evaluated of similarity between profit & non- profit business planning & Wahid’s philosophy- The examined & careful consideration of strategic planning against business planning, Planning ,programming and budgeting system Models (PPBS Model)

He has consulted with more than 35 service & product companies, in recent years Mr. Khan has been spending most of his professional time for financial consulting, Mr. Wahid khan is the owner of “WAM Associates” and “WAK business solutions

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