Private Companies Have Different Users and User Needs Than Public

question 6

Essay

Private companies have different users and user needs than public companies. As a result, many countries have decided to have a separate set of accounting standards that can be followed by private enterprises.
Required:
Describe the five different possible sets of GAAP that a country might adopt for private companies and briefly explain how each might be implemented. Discuss any advantages or disadvantages for these methods.

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Definitions:

Demand Curve

A graphical representation of the quantity of a good or service demanded by consumers at various prices, typically downward sloping indicating an inverse relationship between price and quantity demanded.

Average Revenue Curve

A graphical representation showing how the average revenue per unit sold changes with changes in the quantity of the product sold.

Marginal Revenue Curve

A graphical representation showing the additional revenue a firm can earn by selling one more unit of a good or service.

Marginal Profit

The additional profit earned from selling one more unit of a product or service.