Generally accepted accounting principles, Accounting Basics

GAAP that is Generally Accepted Accounting Principles encompass the conventions, rules and processes necessary to explain accepted accounting practice at an exact time........generally accepted accounting principles comprise not only broad guidelines of general application, but also explained procedures and practices.

The word 'principles' is utilized to mean a "general law or rule adopted or professed like a guide to action, a settled ground or origin of conduct or practice". You will notice this definition illustrates a principle as a general law or rule which is to be utilized as a guide to action. It implies that accounting principles do not prescribe exactly how each detailed event occurring in business should be recorded. Thus, there are some matters in accounting practice that may be different from one company to the other.

Accounting principles are manmade. They are accepted as they are believed to be helpful. The general acceptance of an accounting principle or for such matter or like any principle generally depends upon how well it meets the three criteria of relevance, feasibility and objectivity. A principle is related to the extent that it results in meaningful or helpful information to those who require knowing about a specific business. A principle is objective to the extent such the information is not influenced through the personal bias or judgment of those who furnished it. Objectivity connotes dependability or trustworthiness that also means by the correctness of the information reported can be verified. The principle is reasonable to the extent such can be implemented without excessive complexity or cost.

Posted Date: 4/2/2013 7:05:19 AM | Location : United States







Related Discussions:- Generally accepted accounting principles, Assignment Help, Ask Question on Generally accepted accounting principles, Get Answer, Expert's Help, Generally accepted accounting principles Discussions

Write discussion on Generally accepted accounting principles
Your posts are moderated
Related Questions
Q. Last-in first-out inventory? LIFO (last-in first-out): Ending inventory contains of the oldest costs. LIFO presumes that the costs of the most recent purchases are the first

Q. Explain about stable dollar assumption? In the United States accountants make one more assumption regarding money measurement that the stable dollar assumption. Under the st

How does contribution margin work?

AsCompare and contrast AICPA SSTS to Circular 230 related to knowledge of client''s omission.k question #Minimum 100 words accepted#


I need help with the journal entries for chapters 8 & 9 of this project.

GDYJ-503 is developed according to the national standard GB-86 Insulating Oil Dielectric Strength Testing Method .The tester can test three cups of oil at the similar time. LCD scr

Q. What is Marketable securities? Marketable securities are temporary investments such like short-term ownership of stocks and bonds of other companies. Such investments don't

What are steps to explain supplier? Ans) Supplier should follow the check list. 1 He should make confidence in the client mind 2 Services to be completed (fulfilled in tim

1. For each of the following accounting assumptions/principles, explain a business transaction:   (a) Accounting Entity Assumption (b) Going Concern Assumption (c) Matching Prin