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

Stocks, Please help journalize: -On January 1, 2017 Harmony issued 1,500 sh...

Please help journalize: -On January 1, 2017 Harmony issued 1,500 shares of $22 par, 8% preferred stock for $43,700. -On January 1, 2017 Harmony also issued 2,000 shares of common s

Qualitative characteristics of financial reporting, Q. Qualitative characte...

Q. Qualitative characteristics of financial reporting? Accounting information must possess qualitative characteristics to be useful in decision making. This criterion is hard t

A vendor reduces an item listed at $140 on july 1st by 20%, A vendor reduce...

A vendor reduces an item listed at $140 on July 1st by 20%, and then reduces it another 25% on September 1st. What is the sale price of the good after the last reduction? A. $7

Cash selling and administrative expenses, Stewart Company sold 180 units @ ...

Stewart Company sold 180 units @ $320 each on October 31, 2012. Cash selling and administrative expenses were $15,000. The following information is also available:   The

What is working capital, Q. What is Working capital? Working capital --...

Q. What is Working capital? Working capital -- current assets minus current liabilities. In most businesses majorcomponents of working capital are cash, accounts receivable and

What is customer master record?, A Customer Master Record is a permanent re...

A Customer Master Record is a permanent record that haves key information about a business partner or a material. This information must be entered into the system before any transa

What is post closing trial balance, What is Post closing trial balance ...

What is Post closing trial balance This statement would only show permanent accounts with a balance; all temporary accounts must have a zero balance. Credits and Debits must ba

Example of work sheet for a merchandising company, Q. Example of work sheet...

Q. Example of work sheet for a merchandising company? Lyons Company is a tiny sporting goods firm. The illustration for Lyons Company focuses on merchandise-related accounts. T

Similarity in financial and management accounting & finance, 1.  What are f...

1.  What are financial accounting, management accounting, and finance? What are their similarities and differences? 2. What information does a balance sheet provide? How do acco

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