Understanding GAAP Framework Principles

Medium Financial Reporting Standards Gaap Framework

In the context of the Generally Accepted Accounting Principles (GAAP), companies must adhere to specific framework requirements when preparing their financial statements. One key characteristic of the GAAP framework is the emphasis on consistency and comparability in financial reporting. Which of the following statements best describes a fundamental principle of GAAP regarding financial statement presentation?

GAAP requires all companies to use the same accounting principles regardless of their industry.

GAAP emphasizes the need for companies to disclose any significant estimates and assumptions used in the preparation of financial statements.

GAAP focuses primarily on the relevance of information, without consideration for reliability.

Hint

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