Generally accepted accounting principles, Accounting Basics

Assignment Help:

GAAP that is Generally Accepted Accounting Principles encompass the conventions, rules and processes necessary to explain accepted accounting practice at an exact time........generally accepted accounting principles comprise not only broad guidelines of general application, but also explained procedures and practices.

The word 'principles' is utilized to mean a "general law or rule adopted or professed like a guide to action, a settled ground or origin of conduct or practice". You will notice this definition illustrates a principle as a general law or rule which is to be utilized as a guide to action. It implies that accounting principles do not prescribe exactly how each detailed event occurring in business should be recorded. Thus, there are some matters in accounting practice that may be different from one company to the other.

Accounting principles are manmade. They are accepted as they are believed to be helpful. The general acceptance of an accounting principle or for such matter or like any principle generally depends upon how well it meets the three criteria of relevance, feasibility and objectivity. A principle is related to the extent that it results in meaningful or helpful information to those who require knowing about a specific business. A principle is objective to the extent such the information is not influenced through the personal bias or judgment of those who furnished it. Objectivity connotes dependability or trustworthiness that also means by the correctness of the information reported can be verified. The principle is reasonable to the extent such can be implemented without excessive complexity or cost.


Related Discussions:- Generally accepted accounting principles

Generate the cash flow of companies, Rondo plc, a sports apparel manufactur...

Rondo plc, a sports apparel manufacturer with a cost of capital of 13.75%, is looking to expand its activity and is considering two possible countries to open a sales subsidiary. R

Need for adjusting entries, Q. Need for adjusting entries? The income s...

Q. Need for adjusting entries? The income statement of business information all revenues earned and all expenses incurred to generate those revenues during a given period. An i

Describe about assets, Q. Describe about Assets? Assets are things of w...

Q. Describe about Assets? Assets are things of worth owned by the business. They are as well called the resources of the business. Illustration includes machines, cash and buil

What do you mean by net sales, Q. What do you mean by Net sales? We dem...

Q. What do you mean by Net sales? We demonstrate a condensed income statement to emphasize its major divisions. Next, we explain the more complete income statement actually pre

Prepare a capital investment appraisal analysis, XYZ plc provides engineeri...

XYZ plc provides engineering and consultancy services to the oil and gas industry.  Over the past few years, they have incurred expenditure of £1m researching and developing a new

Accounting diversity and harmonization, The analysis focused primarily on t...

The analysis focused primarily on the role, structure and funding arrangements for the International Accounting Standards Board (IASB), an entity that has been responsible for majo

What is the original annual mortgage payment, You just took out a variable-...

You just took out a variable-rate mortgage on your new home. The mortgage value is $100,000, the term is 30 years, and initially the interest rate is 8%. The interest rate is fixed

What is dividend, Q. What is dividend? One idea of the statement of ret...

Q. What is dividend? One idea of the statement of retained earnings is to connect the income statement and the balance sheet. The statement of retained earnings describes the c

Difference between consignor and consignee, Consignor is the person who is ...

Consignor is the person who is the holder of the goods and who distribute the goods to the consignee. Consignee is the person who takes the goods and he just possesses the goods

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd