1. The GAAP Accounting principles board (APB) was set up accounting principles. Every business enterprise prepares its financial statement in accordance with the GAAP. The GAAP are guidelines for specific accounting issues, which are to be followed by the prepares of financial statement, and are further subject to audit by the auditors, who attest that the financial statements have been prepared in accordance with the GAAP.

2. The GAAP Since the GAAP are generally acceptable to the preparers, auditors and other categories of users, the annual accounts have to be prepared according to the “principles” laid down.

3. Standard Versus Principles The FASB issued 137 standards based upon the conceptual framework. The standards helped in developing solutions to the specific accounting issues. They became part of the generally acceptable accounting principles (GAAP). In fact, they should have been called generally acceptable accounting standards (GAAS).

4. Alternative of accounting Standards A glance through the standard statements of different countries will reveal that there are many alternative treatments (all acceptable as GAAP) Annual financial statements have been prepared by a company adopting any one of the acceptable alternative, the auditor will have to certify that the statements have been prepared in accordance with GAAP.

5. Alternative of accounting Standards For example: 1-(Inventory Valuation): company A adopts FIFO method, company B LiFO adopts method. 2- (depreciation Methods): company A adopts SLM method, company B adopts DM method.

6. Alternative of accounting Standards The income statement prepared by these companies, having been prepared on different bases ( all accepted as GAAP), will have to be attested by certified auditor as having been prepared in accordance with GAAP. However the income statements prepared by these companies are not comparable. The (EPS) will meaningless and will not provide a true interpretation.

7. Comparability of financial statements IASB issued statement which reduce the alternatives.