Financial Accounting Principles

Accountants follow professional guidelines for measurement and disclosure of financial information. These are called generally accepted accounting principles (GAAP). In the United States, the Financial Accounting Standards Board (FASB) formulates GAAP. The International Accounting Standards Board (IASB) sets global or International Financial Reporting Standards (IFRS), the two basic types of external providers of capital include investors (who exchange cash for stock) and creditors (who loan cash) to the entity to be useful, information must have the fundamental qualitative characteristics.