Answer sufficient depth to cover the topic (200 words minimum).
APA citation for sources provided (with a minimum of 1 reference, but no more than 5 references).
Topic: Financial statements are based on generally accepted accounting principles (GAAP) and are audited by CPA firms. Do investors need to worry about the validity of those statements? Explain your answer.
The general financial statements and the balance sheet, income statement and cash flow statement are based on generally accepted accounting principles (GAAP). These statements are audited by CPA firms to ensure that they are accurate and fair representations of a business’s financial position.
GAAP is a set of rules for accounting that establishes standards for how companies report their revenues, expenses, assets and liabilities in financial reports. GAAP also sets out the criteria for reporting these items so that investors can make informed decisions about investing in or purchasing shares in a company based on its reported performance.
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