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
Which accounting policies demonstrate the matching principle?  1 charging depreciation on non-current assets 2 revaluing non-current assets on a irregular basis 3 using the re

After adjustments and the closing of revenue and expense accounts at February 28, 2015, the end of the first full year of operations, the income summary account has a credit balanc

Complete a descriptive analysis of the following data elements in the Organizational Assessment Study dataset. Use appropriate graphical tools and descriptive statistics to charact

Q. Show Employment opportunities in accounting? Throughout the last half-century accounting has gained the same professional status as the medical and legal professions. At pre

Q. Horizontal and vertical analysis? Management carry out horizontal and vertical analyses along with other forms of analysis to help evaluate the wisdom of its past decisions

Q. Explain accounting cycle? Creditors, Investors as well as Managers use these statements in evaluating management's past decisions and as a basis for making future decisions.

Q. What do you mean by Risk management contracts? In the normal course of business the Company utilizes a variety of off-balance-sheet financial instruments to manage its expos

Draw a stem-and-leaf plot for the data set. (Enter numbers from smallest to largest separated by spaces. Enter NONE for stems with no values.) Data set A: The annual wages of emp

Question : The several evaluative criteria for evaluating revenue measure or system are: ? Yield ? Political expediency ? Ease of administration ? Consistency

I need help understanding my Accounting 205 class. Would some one please help me understand what I am having such a hard time comprehending.