Generally Accepted Accounting Principles

acquisition cost

most objective basis/original cost

full disclosure principle

required to provide necessary information for informed decisions (foot notes or attachments)

cash basis

revenue recognized when received

revenue recognition principle

revenues are recognized as soon as goods/services are sold (when earned, realized, realizable)

conservatism principle

when in doubt, record any loss and do not record any gain

monetary unit assumption

you cannot record something without value/number

fiscal

12 month period

objectivity principle

accounting info and financial reporting should be supported w unbiased evidence (more relevant and reliable)

historical cost principle

all assets should be recorded based on acquisition cost

materiality principle

all important info that can sway opinion of a user should be included in financial statements (relative in size & performance)

accrual basis principle

all transactions be recognized in the period in which they occurred (when earned and realizable)

going concern assumption

business entity is assumed to remain in existence and carry objectives and commitment for an indeterminate period of time

accounting entity assumption

business transactions are not equal to personal transactions, records should not include personal assets or liabilities

time period assumption

economic life of business can be divided (at least 1 year)

matching principle

expense recognition, efforts/expenses are matched, prevents understatement of expenses, cause and effect between revenues & expenses

reliability

favorable and unfavorable info is presented in financial statements

relevance

financial statements are accurate, can be used to predict future performance

accounts receivable

goods were sold on credit