Meaning and definition of US GAAP The Generally Accepted Accounting Principles in the US (US GAAP) refer to the accounting

rules used in United States to organize, present, and report financial statements for an assortment of entities which include privately held and publicly traded companies, non-profit organizations, and governments. The term is confined to the US and is, therefore, generally abbreviated as US GAAP. But theoretically, the term "GAAP" covers the entire accounting industry, rather than only the US. Basic objectives of US GAAP As a part of US GAAP, the financial reporting should provide information as following:

The provided info should be apt to be presented to creditors and potential investors in addition to other users for making cogent decisions concerning investment, credit and similar financial activities.

The provided info should be helpful to the creditors and potential investors in evaluating the amounts, timing, and uncertainty of expected cash receipts. The info should be related to economic resources, the claims to those resources, as well as the changes occurring in them. The provided info should be helpful in making financial and long-term decisions. The information should be helpful in perking up the business performance. The information should be helpful in maintaining records.

Basic Assumptions of US GAAP The US GAAP features four basic assumptions to meet its objectives. These are:

Accounting Entity

This assumes the business to be a separate entity from its owners as well as other businesses. Moreover, it also stresses on keeping revenue and expense separate from personal expenses.

Going Concern

This assumption presumes that the business will be indefinitely in operation. This assumption authenticates the methods of amortization, depreciation, and asset capitalization. However, this assumption is not applicable in the event of liquidation.

Monetary Unit Principle Time-period Principle

This assumption presumes an unwavering currency to continue to be the unit of record. This assumption states that a business enterprises economic activities can be divided into simulated time periods. While preparing financial statements through the use of GAAP, a large number of American corporations and other business enterprises follow the rules of how to report different business transactions based on the assorted GAAP rules.

These are used to prepare, present and report financial statements for a wide variety of entities, including publicly traded and privately held companies, non-profit organizations, and government authorities, with the Financial Accounting Standards Board (FASB) establishing rules for public and private companies, and non-profit organizations; the Governmental Accounting Standards Board (GASB) determining a different set of assumptions, principles for local and state governments - and the Federal Accounting Standards Advisory Board (FASAB) performing a similar role for federal government entities. Although the SEC has a stated goal of moving from US GAAP to the International Financial Reporting Standards (IFRS) -------------------------------------------------------------------------------------------------------------------------------------

The International Financial Reporting Standards (IFRS) - the accounting standard used in more than 110 countries - has some key differences from the U.S. Generally Accepted Accounting Principles (GAAP). At the conceptually level, IFRS is considered more of a "principles based" accounting standard in contrast to U.S. GAAP which is considered more "rules based." By being more "principles based", IFRS, arguably, represents and captures the economics of a transaction better than U.S. GAAP.