There are general rules and concepts that govern the field of accounting. These general rules-referred to as basic accounting principles and guidelines-form the groundwork on which more detailed, complicated, and legalistic accounting rules are based. For example, the Financial Accounting Standards Board (FASB)uses the basic accounting principles and guidelines as a basis for their own detailed and comprehensive set of accounting rules and standards.
The phrase "generally accepted accounting principles" (or "GAAP") consists of three important sets of rules: (1) the basic accounting principles and guidelines, (2) the detailed rules and standards issued by FASB and its predecessor the Accounting Principles Board (APB), and (3) the generally accepted industry practices.
If a company distributes its financial statements to the public, it is required to follow generally accepted accounting principles in the preparation of those statements. Further, if a company's stock is publicly traded, federal law requires the company's financial statements be audited by independent public Accountants. Both the company's management and the independent accountants must certify that the financial statements and the related notes to the financial statements have been prepared in accordance with GAAP.
GAAP is exceedingly useful because it attempts to standardize and regulate accounting definitions, assumptions, and methods. Because of generally accepted accounting principles we are able to assume that there is consistency from year to year in the methods used to prepare a company's financial statements. And although variations may exist, we can make reasonably confident conclusions when comparing one company to another, or comparing one company's financial statistics to the statistics for its industry. Over the years the generally accepted accounting principles have become more complex because financial transactions have become more complex.
Relevance
Relevance requires that the financial accounting information should be such that the users need it and it is expected to affect their decisions.
Reliability requires that the information should be accurate and true and fair.
Relevance and reliability are both critical for the quality of the financial information, but both are related such that an emphasis on one will hurt the other and vice versa. Hence, we have to trade-off between them. Accounting information is relevant when it is provided in time, but at early stages information is uncertain and hence less reliable. But if we wait to gain while the information gains reliability, its relevance is lost.
ExamplesThe Accounting Principles are the assenition rules of accounting and the application of these rules, method & procedures to actual practice of accounting. These Accounting principles have been divided into a. accounting concepts b. accounting conventions.
The Accounting Principles are the assenition rules of accounting and the application of these rules, method & procedures to actual practice of accounting. These Accounting principles have been.The basic principle of accounting is to identify, record, and communicate financial transactions. The simple form of the basic accounting equation is assets equals liabilities plus equity.
The most important of the accounting is to comply with generally accepted accounting principles and standards and norms that conducted by accounting organizations. Accounting must have qualities characteristics. With these characteristics, it will be useful to users. Example for characteristics: relevance, reliability and comparability
General Principles and Specific Principles. If you want to know more about "Basic Accounting Principles and Guidelines" go for below url: www[.]accountingcoach.com/accounting-principles/explanation
Accounting principles differ throughout the world. Whether you are an accounting student or an investor, you should be aware of the accounting principles that apply in your region.
The Accounting Principles are the assenition rules of accounting and the application of these rules, method & procedures to actual practice of accounting. These Accounting principles have been divided into a. accounting concepts b. accounting conventions.
The Accounting Principles are the assenition rules of accounting and the application of these rules, method & procedures to actual practice of accounting. These Accounting principles have been.The basic principle of accounting is to identify, record, and communicate financial transactions. The simple form of the basic accounting equation is assets equals liabilities plus equity.
The most important of the accounting is to comply with generally accepted accounting principles and standards and norms that conducted by accounting organizations. Accounting must have qualities characteristics. With these characteristics, it will be useful to users. Example for characteristics: relevance, reliability and comparability
James Lewis Dohr has written: 'Cost accounting practice problems' -- subject(s): Cost accounting 'Cost accounting, principles and practice' -- subject(s): Cost accounting
John Rudolph Byland has written: 'Accounting principles and practice' -- subject(s): Accounting
of accounting principles
what is the list of generally accounting accepted principles
General Principles and Specific Principles. If you want to know more about "Basic Accounting Principles and Guidelines" go for below url: www[.]accountingcoach.com/accounting-principles/explanation
Accounting principles differ throughout the world. Whether you are an accounting student or an investor, you should be aware of the accounting principles that apply in your region.
Emile Garcke has written: 'Factory accounts, their principles and practice' -- subject(s): Accounting, Factories
in the phrase generally accepted accounting principles means
GAAP - Generally Accepted Accounting Principles