Accounting

A company has to know whether what they are doing makes money, right? The people who know how to figure this out are the accountants.

In the US, accounting is done according to Generally Accepted Accounting Principles (GAAP). This provides a standard method of accounting so that when one company says they made “X” dollars in profit, if can be compared to the performance of another company.

In order to make sure that everyone is counting the same way, there are several groups that have oversight. The IRS is one. They have their own way of doing accounting, so sometimes companies have different numbers for taxable income that they report to the IRS, and net income that they report in financial disclosure documents.