Generally Accepted Accounting Principles

Accountants commit to applying the same standards throughout the reporting process, from one period to the next, to ensure financial comparability between periods. Accountants are expected to fully disclose and explain the reasons behind any changed or updated standards in the footnotes to the financial statements.

Principle of Consistency

While valuing assets, it should be assumed the business will continue to operate.

Principle of Continuity

Accountants must strive to fully disclose all financial data and accounting information in financial reports.

Principle of Materiality

Both negatives and positives should be reported with full transparency and without the expectation of debt compensation.

Principle of Non-Compensation

Entries should be distributed across the appropriate period of time. For example, revenue should be reported in its relevant accounting period.

Principle of Periodicity

The procedures used in financial reporting should be consistent, allowing a comparison of the company's financial information.

Principle of Permanence of Methods

This refers to emphasizing fact-based financial data representation that is not clouded by speculation.

Principle of Prudence

The accountant has adhered to GAAP rules and regulations as a standard.

Principle of Regularity

The accountant strives to provide an accurate and impartial depiction of a company's financial situation.

Principle of Sincerity

Derived from the Latin phrase ubberimae fidei used within the insurance industry. It presupposes that parties remain honest in all transactions.

Principle of Utmost Good Faith