Answer
Answer (a) Financial reporting is concerned with summarizing the results of the operations of the company. Financial reports reveal useful information about the performance of the company. For example, whether or not the company generated enough cash from operations to be able to pay its current liabilities as well as to provide sufficient cash for the payment of dividends to stakeholders.
On the other hand, Generally Accepted Accounting Principles (GAAP) are a predefined set of rules and procedures that forms the basis of recognition, measurement and disclosure of financial figures in the financial reports.
Work Step by Step
Answer (b) The rulings of financial reporting do not place any restrictions on what information should or should not be disclosed in financial statements. Therefore, although scientific findings can be reported to investors, but they will not form part of the main financial statements as these are primarily qualitative and GAAP deals with quantitative financial information only.
