I don’t understand this Health & Medical question and need help to study.
You presented relevant information regarding economic and accounting profits. You stated, “Economic profits are determined by economic principles, whereas accounting is determined by GAAPS.” What is GAAPS? How would you describe GAAPS to your colleagues?
Expert Solution Preview
Introduction: In this response, we will discuss GAAP, which is an important concept in accounting. GAAP stands for Generally Accepted Accounting Principles and is used to ensure consistency in financial reporting across different companies.
Answer: GAAP is a set of guidelines and standards that are used to govern financial accounting and reporting. These principles help ensure that financial statements are informative, transparent, and consistent across different companies. The purpose of GAAP is to provide investors, creditors, and other stakeholders with reliable financial information that they can use to make informed decisions. GAAP includes rules for recording transactions, preparing financial statements, and disclosing information about a company’s financial performance. In summary, GAAP provides a framework for consistent and accurate financial reporting, which is essential for maintaining public trust in the financial markets.