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Accounting and GAAP

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Discuss what is Accounting and why is it important? Be sure to include the different types of users of Accounting and their need for accounting.

What is GAAP and why is it important?

Please provide references if used in the answer.

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This solution is comprised of the detailed explanation of the definition of Accounting and its importance. It includes the different types of users of Accounting and their need for accounting. The definition and explanation of GAAP and its importance are also included.

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Accounting is a "collection of systems and processes used to record, report, and interpret business transactions. Accounting provides an account - an explanation or report in financial terms - about the transactions of an organization" (Collier, 2006). The importance of accounting lies in three aspects:

Scorekeeping: capturing, recording, summarizing, and reporting financial performance.
Attention-directing: drawing the attention of managers to, and assisting in the interpretation of, business performance, particularly in terms of the comparison between actual and planned performance.
Problem-solving: identifying the best choice from a range of alternative actions.

Some of the different types of users of accounting are accountants, auditors, and managers.

Accountants and auditors use accounting to ensure that the firm is run efficiently. They also make ...

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