GAAP Accounting Standards are the set of standards that accountants use everywhere in the world to record and report financial information. They are the basis for corporate business planning, budgeting, and forecasting – as well as for tax reporting. Every aspiring accountant must acquire knowledge of the GAAP standards. If you are one of the aspiring candidates, this blog is for you. Here, we will discuss this field and tell you about the resources you can take to learn the basics of GAAP Accounting Standards and how to become a Certified GAAP Professional.
GAAP Accounting Standards Overview
Accounting rules and standards are complex, but the information they present is vital to informed decision-making. GAAP Accounting Standards describe all of the main accounting regulations for businesses in a way that’s easy to understand.
GAAP Accounting Standards have generally accepted accounting principles, which are issued by the FASB, define reporting requirements and what must be reported to meet these requirements. These accounting principles are widely used in the United States for public companies and by the private sector, both in the preparation of financial statements, as well as government regulatory processes.
The main aim of GAAP is to make sure that the financial data of an organization is complete and consistent. This will allow the analysts to make the financial decisions effectively, and help the company grow better. With correct reporting and analysis, accountants can bring down the margin of loss.
Principles of GAAP
These are general principles that cover the aims of GAAP –
1.) Principle of Regularity
Accountants have to stick to the standards of GAAP to stay on par with the global trend.
2.) Principle of Consistency
Accountants have to make sure they use the same standards for all the financial reports and analyses. This will ensure consistency and compatibility across different firms. In case of any change or update in the standards of accounting, the accountants should explicitly mention it in the footnotes of the financial statements.
3.) Principle of Sincerity
The accountant should work accurately and provide an unbiased and impartial depiction of the organization’s financial status.
4.) Principle of Permanence of Methods
The procedures used in financial reporting should be consistent, allowing comparison of the company’s financial information.
5.) Principle of Non-Compensation
Both negatives and positives should be reported with full transparency and without the expectation of debt compensation.
6.) Principle of Prudence
Emphasizing fact-based financial data representation that is not clouded by speculation.
7.) Principle of Continuity
While valuing assets, it should be assumed the business will continue to operate.
8.) Principle of Periodicity
Entries should be distributed across the appropriate periods. For example, revenue should be reported in its relevant accounting period.
9.) Principle of Materiality
Accountants must strive to fully disclose all financial data and accounting information in financial reports.
10.) Principle of Utmost Good Faith
Derived from the Latin phrase “uberrimae fidei” used within the insurance industry. It presupposes that parties remain honest in all transactions.
Anyone interested in finance can benefit from the global Acceptance and Advancement of Payments (GAAP) exam and anyone who wants to boost their current professional skill set can also learn from this certification. There are a lot of other certifications, but they mostly require an investment of time or money or even both. Both the time and money may sometimes seem excessive for individuals who already have an established career and possess strong knowledge about financial laws. This is where the GAAP exam comes into play.
If you’re already in the workforce, or about to enter the workforce, it’s essential that you combine your practical skills with technical skills. Candidates who are willing to work in the financial departments of companies and firms should go for this domain. Learning the GAAP standards can be beneficial
Market Demand of GAAP Accounting Standards
GAAP is the language of business. Whether you’re an accountant, finance professional, or someone with a stake in a business, understanding the basics of accounting is pretty important. The reason for this is the sheer number of standards (rules) in GAAP and their technical nature. This makes the application of GAAP, not just a professional activity but also an educational one.
Globalization is creating a new order in the economic world of the twenty-first century. As globalization begins to expand, businesses have started operating in foreign countries and from abroad. The development of common accounting principles in multiple countries is needed to ensure that businesses can maintain uniform financial records and be globally competitive. In this scenario, accounting standards are being adopted and used across countries with uniformity. Acceptance of uniform international accounting standards is helping in simplifying the accounting process worldwide. It also helps in the easy transmission of potentially relevant information from one country to another.
Certification in the general area of finance and accounting is hard to get and even harder to maintain. However, bypassing the Institute of Global Accountants’ (IGA) GAAP (Generally Accepted Accounting Principles) certifications, the job seekers can easily perform the desired and much-needed jobs such as internal auditing, cash flow analysis, cost performance management, and financial reporting.
Preparatory Resources for Certified GAAP Professional
When preparing for a certification exam, we tend to dive straight into the studying phase. It is important to set goals and study effectively. But if you’re looking for material to study from, it can be a little confusing trying to figure out which resources are trustworthy and up-to-date. You want to invest your time studying from the best possible resources. I have compiled a list of some helpful resources that you can use for preparation, depending on your learning style and specific exam needs.
Learn with Certification
A globally recognized certification would require efforts and dedication to earn. However, it comes with a validation of skills and knowledge. Also, while you invest in a good certification, you get to learn a lot of concepts and get practical exposure in a given domain. The job of an accountant is a responsible position. Hence, it is vital to earn a credential that covers all the aspects of accounting Standards.
To learn about the GAAP Accounting Standards, we recommend you to take the Certified GAAP Professional certification. Let us talk in detail about the perks of this certification.
Certification Overview: Certified GAAP Professional
The Certified GAAP Professional (CGP) program is the premier training course for finance professionals who specialize in GAAP. The CGP certification is designed to help finance professionals working in the current environment of global business. The CGP certification provides students with the expertise required to ensure that they are able to analyze a company’s financial statements, understand how financial statements are prepared, and communicate the findings effectively.
Course Outline for Certified GAAP Professional
Certified GAAP Professional covers the following topics –
- Firstly, the Conceptual Framework
- Secondly, Disclosure of Accounting Policies
- Thirdly, Valuation of Inventories
- Then, the Cash Flow Statement
- Further, Contingencies and Events Occurring
- Also, Net Profit or Loss for the Period
- Then, Depreciation
- Construction Contracts
- Revenue Recognition
- Furthermore, Accounting for Fixed Assets
- Changes in Foreign Exchange Rates
- Accounting for Government Grants
- For Investments
- Accounting for Amalgamations
- Employee Benefits
- Borrowing Costs
- Segment Reporting
- Related Party Disclosures
- Accounting for Leases
- Earnings Per Share
- Consolidated Financial Statements
- Accounting for Taxes on Income
- Accounting for Investments in Associates in Consolidated
- Discounting Operations
- Interim Financial Reporting
- Accounting for Intangible Assets
- Also, Financial Reporting of Interests in Joint Ventures
- Impairment of Assets
- Lastly, Provisions, Contingent Liabilities, and Contingent Assets
Benefits of the Certification
Vskills being India’s largest certification providers gives candidates access to top exams as well as provides after exam benefits. This includes:
- Firstly, the certifications will have a Government verification tag.
- Secondly, the Certification is valid for life.
- Thirdly, Candidates will get lifelong e-learning access.
- Further, Access to free Practice Tests.
- Lastly, Candidates will get tagged as ‘Vskills Certified’ On Monsterindia.com and ‘Vskills Certified’ On Shine Shine.com.
Before you start preparing for the certification, it is important to know all the details of it. For this, we have designed a free online tutorial that comprehensively covers the details of the exam. In the tutorial, there is a detailed description of the course outline. Also, you will get a list of resources that will help you in preparing for the exam. The exam guide provided in the tutorial will help you in understanding the pattern of the exam. And how to start your preparations in the right direction.
Recommended Books for Certified GAAP Professional
Books are one of the best ways to gain knowledge and learn about a subject. While there is no substitute for hands-on experience, books can help to augment what you have learned from testing and give you a more complete understanding of the subject.
- Firstly, Wiley GAAP 2020: Interpretation and Application of Generally Accepted Accounting Principles Book by Joanne M. Flood
- Secondly, GAAP Guide (2020) Book by Jan R. Williams and Joseph V Carcillo
Take the Practice Tests
Practice tests are a great way to gauge your preparedness level for the actual exam. By taking practice tests, you can see how prepared you are for the actual exam, and if there is anywhere that you need to focus more or hit harder. These practice tests are also important because the tests contain questions that closely resemble the actual test, allowing you to become familiar with question styles so that you aren’t surprised during the real test. Start Practicing now with a free practice test!