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GAAP (The historic reason (various economic, social ,cultural factors…
GAAP
The historic reason
difference in accounting principle
legal requirement
arise on a contingency basis
a response to an unusual event
unlikely experience the same unusual event
even they do, the events may not occur at the same time
provoke the same changes in requirement
change in the economic environment
various economic, social ,cultural factors
cultural: different attitudes
the law should be obeyed
subtle understanding about which law and the degree to which they have to be obeyed
there are separate rules for financial reporting and tax purposes
view on the objective of financial reporting
meeting the needs of investor
UK, the main source of finance is equity finance( raised on stock market)
provide information for creditor protection and taxation
Debt finance( finance institution)
Regulatory framework for financial reporting that applies in a particular jurisdiction