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Is it possible to deviate from GAAP and the accounting cycle and still prepare financial statements? What are some possible consequences of this course of action?

Yes, it is possible to deviate from GAAP and still produce effective financial statements. Companies may deviate from GAAP to produce internal financial reports that can be used for decision making purposes. For example, a company could report assets at their market value, rather than the historical purchase price. This may be beneficial if the company plans to liquidate in the near future.

The primary problem with deviating from GAAP is that it eliminates consistency and comparability, and 3rd parties users may have a difficult time understanding the information. Investors and creditors may be unable to make sound decisions from data that deviates from GAAP. It should be noted that this can only apply to privately held firms, as publicly traded companies must adhere to GAAP where releasing quarterly and annual reports. accordingly. 

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