US GAAP: A New Way to Talk About Money
Arpit Singhal
US Accounting Enthusiast, Book Keeping | Experienced Digital Marketer | Facebook Ads | Google Ads
US GAAP: A New Way to Talk About Money
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Today, I learned about something called US GAAP. It's like a special rulebook for counting money that companies in the US follow. It's different from how we count money in India!
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Why do we need rules for counting money?
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Imagine you're trying to compare two friends' toy collections. It would be hard if one friend counted cars, and the other counted balls. We need rules so everyone counts the same things in the same way. That's what accounting rules do for companies.
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What does US GAAP do?
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US GAAP has a plan for how to talk about money. It wants to make sure everyone understands what the numbers mean.
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Clear Goals: First, it says why we're counting money. It's to help people decide if a company is a good place to put their money or lend money.
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Good Numbers: Then, it talks about what makes good numbers. We want numbers that are true, fair, and easy to understand.
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Money Stuff: It tells us what things are money stuff. Like, things a company owns (like toys) and things it owes (like money it borrowed to buy toys).
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When to Count: It says when to start counting something as money earned or spent.
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Big Picture: It helps us see how a company grows and makes more money over time.
How is it different from India?
?In India, we might have different rules for counting money. US GAAP is like a special language for talking about money that many big companies use. It's like learning a new way to talk about your toy collection.
?Let's break it down:
?Assets: These are like a company's toys. They are things that have value.
Liabilities: These are like promises to pay someone back, like borrowing money to buy more toys.
Equity: This is like the difference between a company's toys and what it owes. It's like your own toys after you pay back what you borrowed.
Revenue: This is like selling your toys and getting money.
Expenses: This is like spending money to buy new toys or fix old ones.
Gains and Losses: These are like extra money you get or lose, not from selling toys but from other things.
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Why is this important?
?Understanding US GAAP is like learning a new language. If you want to work for a big company or understand how global businesses work, knowing this language is helpful. It helps us compare different companies and make smart decisions about money.
?I'm still learning about US GAAP, but it's interesting to see how different countries have different ways of talking about money. It's like comparing apple and oranges, but in the world of business, it's important to understand both.
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