Question

Accountants establish measurement and reporting rules that business people use to facilitate communication of financial information. The financial accounting measurement rules used in the United States are referred to as ________.

Answer 1

Answer:

GAAP

Explanation:

While many businesses assume that accountants are bound by generally accepted accounting practices (GAAP), and that these are inviolable, nothing could be further from reality. Everything is subject to interpretation, and GAAP is no exception. First, these practices allow the use of alternative accounting methods for certain expenses and for the income of certain specialized businesses. On the other hand, these methods require decisions about the time at which expenses and income are recorded, and require that the key factors be quantified. Deciding the time of income and expenses, and putting a definite value on these factors requires judgment, estimation and interpretation.

The GAAP statement prepared by the Standard Financial Accounting Council (CCFE) is now more than 1000 pages long. And that doesn't even include the rules and regulations implemented by the federal regulatory agency that has jurisdiction over the financial reports and accounting methods used by public businesses - the US Security and Exchange Commission (CSI).