The contemporary business setting in the US calls for a basic understanding of Generally Accepted Accounting Principles (GAAP). As a standard set of accounting rules and norms recognized by American entrepreneurs, established businesses in the country adhere to the regulations set in the GAAP without hesitation.
But how about small business owners? Given their limited client network and a business cash flow that is considerably less complex than growing enterprises, do they still need to follow GAAP procedures?
In the same way that companies with more expanded business operations deal with estimates and judgments in business accounting, small business owners also grapple with similar concerns. It is for this reason that the value of using GAAP is also pertinent to these entrepreneurs.
To give you a clearer perspective on the basics of GAAP, here are some of the reasons why GAAP is extremely vital in the creation and interpretation of financial statements: