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    Are GAAP accounting rules required by law?
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    There is no law or statute that forces companies to use GAAP rules. They are simply rules of accounting that were adopted by the accounting profession. If a company is private and does not have to report financial results to anyone, it can follow whatever accounting rules it desires. However, often companies have to deal with banks when they take loans. In such cases, the banks often require the companies to see their financial statements. In these instances, it is prudent to follow standards rules such as GAAP.

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