Generally accepted accounting principles 699

Generally accepted accounting principles 699
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Generally accepted accounting principles (GAAP), created with authoritative support, are principles, rules and guidelines required to follow by accountants when preparing financial statements. The Hierarchy of GAAP is a structure consists of four different categories of well- developed accounting principles. The categories are from A to D with category A having principles with the most authoritative support and category D having the lease. Major sources of The Hierarchy of GAAP are FASB Standard, Interpretations, and Staff Positions; APB Opinions; and AICPA Accounting Research Bulletins. This hierarchy is important because it minimize the financial data from being bias and inconsistency by using multiple sources of the GAAP instead of just one. For example, if two or more sources in a given category do not agree with a specific transaction, then a higher category should be followed. Two primary qualities that make its accounting information effective are relevance and reliability. Relevant information has predictive value, which help users foretell the outcome of events in the past, present, and future. Another reason why relevant information is effective is because it is presented in a timely manner that is
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