The 10 Accounting GAAPs

Time Period Principle

- all the financial statements have one start date and an end date - financial statements are related to a specific period of time

Going Concern Principle

- it is assumed that the business has no end date - it is eternal

Materiality Principle

- only material information should be disclosed - differentiation is needed between important and not so important issues

Historical Cost Principle

- the accounting posting should be made at the amount of actual price payment - balance sheet should show cost (without adjustment of market value)

Conservative Principle

a business should provide for all expense and losses, but shall never anticipate any gain/profit

Matching Principle

a company should report an expense in the period in which it earns the corresponding revenue

Single Entry Principle

all the financial statements and records are distinct from its owners or other businesses

Monetary Unit Principle

all the transactions should be recorded in a single currency

Recognition Principle

company should record revenue and cost when they occur and not when cash is received/paid

Full Disclosure Principle

every company must make full disclosure of its information and should not hide any material information that may affect investor's decisions