Generally Accepted Accounting Principles (GAAP) – Accounting Choices

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Dear M & M:

What does the term “Generally Accepted Accounting Principles” (GAAP) mean?

– Teresa

Dear Teresa:

Generally Accepted Accounting Principles are rules to which accountants adhere when preparing financial statements. The Generally Accepted Accounting Principles exist to ensure that American accountants are using the same or almost the same standards so that comparison of financial statements between or within a company is easy and accurate. They also promote transparency in accounting. The GAAP are set by the Financial Accounting Standards Board (FASB). The Financial Accounting Standards Board (FASB) is a private, not-for-profit organization whose primary purpose is to develop generally accepted accounting principles (GAAP) within the United States in the public’s interest. The Securities and Exchange Commission (SEC) designated the FASB as the organization responsible for setting accounting standards for public companies in the U.S. It was created in 1973, replacing the Committee on Accounting Procedure (CAP) and the Accounting Principles Board (APB) of the American Institute of certified Public Accountants (AICPA). The FASB’s mission is “to establish and improve standards of financial accounting and reporting for the guidance and education of the public, including issuers, auditors, and users of financial information.” To achieve this, FASB has five goals: *Improve the usefulness of financial reporting by focusing on the primary characteristics of relevance and reliability, and on the qualities of comparability and consistency. *Keep standards current to reflect changes in methods of doing business and in the economy. *Consider promptly any significant areas of deficiency in financial reporting that might be improved through standard setting. *Promote international convergence of accounting standards concurrent with improving the quality of financial reporting. *Improve common understanding of the nature and purposes of information in financial reports.-Wikipedia

-M&M

 

Dear M&M:

I finally have my business up and running and have heard I should use a software package to help me with my accounting.  How do I make the best choice?

– Mary

Dear Mary:

Congratulations on getting your business up and running!  Accounting software can help you to organize and manage your entire accounting process and even make tax time easier and faster to manage. Use small business accounting software prior to investing in a program to determine the best software for your business. Investigate: Before choosing a small business accounting program for your business, talk to other small business owners to see which programs they use for their businesses. Discuss the pros and cons of the software they use and how it has helped them. Learn about the specific ways in which the business owners use the software, such as for invoicing, processing credit card payments or to run tax reports for the business tax adviser to compile the business tax returns.

Features: Learn about the various features that the small business accounting software offers. You may want to schedule a training session with an expert in the software you have, or are thinking of purchasing. Once you know everything you can do with your small business accounting software, you can maximize the benefits of the software by using the options that pertain to your business. For example, you may determine that you can handle your payroll with the small business accounting software rather than outsourcing it to a payroll service. Integration: Many small business software programs are compatible with other software and programs you use for your business. Integrating your small business accounting software with the other aspects of your business can save you time and money. For example, many online businesses can integrate the online shopping cart with the small business accounting software to automatically issue invoices and reconcile the sales from the website with the accounting software. Update and Expand: New features often come out for your existing software or are developed in new small business accounting software. Keep your software up-to-date to ensure your business is fully benefiting from the software and its features. Small business accounting software updates and upgrades may offer expanded features that your business can use to save money, save time, boost sales and more.

-M&M

To ask your questions: Call the Small Business Development Center(SBDC) at Cochise College (520)-515-5478 or email schmittm@cochise.edu or contact the Sierra Vista Economic Development Foundation(EDF) at 520-458-6948 or email  hollism@svedf.org

 

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