Accounting GAAP Terms

Consistency Principle

Accountants apply same methods and procedures from period to period. When changes are made, they must be explained clearly in the financial statements

Materiality Principle

Accountants are required to use GAAPs except when to do so would be expensive or difficult and where it makes no real difference.

Cost Principle

Accounting for purchases must be recorded and remain at their cost price

Business Entity Concept

Accounting from business or organization is kept separate from personal affairs of the owner.

Monetary Unit Assumption

Accounting measures and reports the results of economic activities in terms of a stable monetary unit

Conservatism

Accounting of business should be fair and reasonable. Results should not overstate or understate affairs of the business

Time Period Concept

Accounting takes place over specific time periods known as fiscal periods. The fiscal periods should be equal length when used to measure financial progress of the business

Objectivity Principle

Accounting will be recorded on evidence. Different people looking at same transactions will get the same results at the end

Full Disclosure Principle

Any and all information that affects the understanding of a company's financial statements must be included within the companies financial statements

Going Concern Concept

Assumes that a business will continue to operate unless it is known otherwise

Expense Recognition

Expenses are recorded when benefit is used up to generate revenue

Revenue Recognition

Revenue should be taken into account at the time the transaction is completed