Advantages of GAAP
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1) Statements of different companies can be compared with each other as principles followed by them will be the same.
2) Statements of a company can be compared with the statement of previous years which will enable the company to know the growth and earnings of the company.
3) Investor’s trust in the financial statement will be affected more by GAAP. If a company follows GAAP and prepared statements on the basis of this, the investor will be more prone to invest in the company rather than investing in the company which is not following GAAP.
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