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Questions
Why are Generally Accepted Accounting Principles (GAAP) needed?
Why accounting principles are necessary.
Long Answer
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Solution
Accounting principles are necessary due to the following reasons:
- Accounting principles facilitate uniformity in accounting practices. The information become comparable, leading to better analysis and comparison of performances.
- Accounting principles facilitate meaningful presentation.
- They ensure consistency in the accounting statements of a business enterprise from year to year.
- They may be regarded as a means to establish that the collective wisdom and experience, rather than the viewpoint of individual accountant, may prevail in the matter.
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Generally Accepted Accounting Principles (GAAP)
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Chapter 5: Generally Accepted Accounting Principles (GAAP) - EXERCISES [Page 90]
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