GAAP refers to US accounting standards established by the Financial Accounting Standards Board. GAAP revenue recognition rules require revenue to be realized or realizable and earned before it can be recorded. These rules apply to accrual basis accounting and have been developed to prevent fraudulent or overinflated income statements. Generally Accepted Accounting Principles, or GAAP, […]
Lease classification as operating expenses or capital investments affects financial statements and can be manipulated. GAAP lease accounting requires a four-prong test to determine classification, with capital leases creating assets and liabilities on balance sheets. Two GAAP criteria for capital leases relate to equipment disposition and lease payment value. Businesses can account for leases as […]
A GAAP income statement is a financial report adhering to guidelines set by the FASB, providing consistency and ethical reporting. It includes several statements, such as the balance sheet and cash flow statement, and follows specific principles, such as distinguishing between current and non-current assets and liabilities. While useful, it’s important to do a deeper […]
GAAP has four methods for accounting for depreciation on assets: straight-line (SL), units of production (UOP), declining balance (DB), and sum of the year digits (SYD). SL is the most common method and considers the life and cost of the asset. UOP considers the number of production and costs. DB is used for assets that […]
GAAP and tax accounting have different rules and motivations, with GAAP providing more detail and a better overall picture of a company’s health. Both methods are necessary for tax filing, and larger companies with international presence may use International Financial Reporting Standards (IFRS). The main differences between generally accepted accounting principles (GAAP) and tax accounting […]
GAAP software is important for companies following accounting principles. Choosing the right software involves cost, usage, and availability. Small businesses can start small and add modules as they grow. Recommendations from public accounting firms and FASB can affect software choice. The software must be updated for changes in GAAP. The technology is extremely beneficial for […]
GAAP coding simplifies accounting by establishing standard coding processes based on generally accepted accounting principles. It involves a four-layer approach and defines categories for tracking assets and liabilities, making it easier to reconcile and audit financial records. GAAP coding is a process that involves establishing standard coding processes based on generally accepted accounting principles. Introduced […]
