Generally Accepted Accounting Principles (GAAP)
Generally Accepted Accounting Principles (GAAP)
a set of principles where they are a set of rules considered vital in the realm of accounting
What are GAAP facts?
1) Transactions get recorded twice (checks/balances) 2) Financial statements report on the business entity only (not owner/not investors) 3)Debts are paid within one year, or one business cycle, whichever is longer
Who made GAAP?
Financial Accounting Standards Board (FASB); a third party governing body
Historical Cost Principle
GAAP principle; assets are reported at historical costs (book or true value)
Going-Concern Principle
GAAP principle; assume that the business will last forever
Stable Monetary Unit Principle
GAAP principle; assumes value - currency stays the same each year
Conservative Principle
GAAP principle; resolving finical statement. uncertainty in the least favorable way
Objectivity Principle
GAAP principles; transactions are recorded using the best objective evidence (it is what it is)