The Convergence with Generally Accepted Accounting Principles
To make the system of accounting, the use of accounting principles came into existence. Different companies had different principles for their betterment. So it was difficult to analyse different financial statements following different standards and principles. To solve this problem the Generally Accepted Accounting Principles (GAAP) were formulated. International Accounting Standard Board has made it mandatory to follow Generally Accepted Accounting Policies. The Generally Accepted Accounting Policies includes three major things; the accounting standards, the accounting principles and the accounting procedures. The companies use the Generally Accepted Accounting Policies to report their financial statements. The standards and principles mentioned in the Generally Accepted Accounting Policies are accepted globally. Almost every country in the world is following the Generally Accepted Accounting Policies. The United States of America is the only country which neither follows neither the Generally Accepted Accounting Policies nor the International Accounting Standard Board. It has its own standards and principles set. The best feature of the Generally Accepted Accounting Principles is that it gives the users of financial statements the benefit of accuracy and consistency. The Generally Accepted Accounting Principles help in better understanding of the financial statements. International Financial Reporting Standards and Generally Accepted Accounting Principles has the main motive of setting high quality standards which would result in maintenance of high quality financial statements.