Generally accepted accounting principles (GAAP) are a set of rules and practices, having substantial support, that are recognized as a general guide for financial reporting purposes. Publicly owned corporations are required to include in their annual reports a description of the accounting principle that they followed in the preparation of their financial statements. Once the company adopted an accounting principle, the principle must be followed in a consistent basis.
Please do a preliminary research and discuss the following questions:
1. Discuss the objectives of the consistency standard.
2. Select 2 companies in the same industry, and use the Internet to find their current balance sheets. Then, discuss what is disclosed in the footnotes of the financial statements in regard to the accounting principles on inflation.
3. Based on your study of the two companies balance sheet, which company has better financial position and why.
4. Define GDP and GNP. What do they measure, and how does this impact the organization?
5. Discuss the role of the Fed on the national economy, and how does this impact the organization?
6. Share with the class what you have found. Do not use the companies that one of your classmates has used.