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