| Generally Accepted Accounting Principles |
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| financial accounting | |
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OVERVIEW Financial accounting information must be assembled and reported objectively. Third-parties who must rely on such information have a right to be assured that the data are free from bias and inconsistency, whether deliberate or not. For this reason, financial accounting relies on certain standards or guides that are called "General Accepted Accounting Principles" (GAAP). GAAP derive, in order of importance, from: (1) issuances from an authoritative body designated by the American Institute Of Certified Public Accountants Council (for example, the Financial Accounting Standards Board Statements, AICPA Accounting Principles Board Options, and AICPA Accounting Research Bulletins); (2) other AICPA issuances such as AICPA Industry Guides; (3) industry practice; and (4) accounting literature in the form of books and articles. Principles also derive from tradition, such as the concept of matching. In the audit report, the CPA must indicate that the client has followed GAAP on a consistent basis. FRAMEWORK OR LAWS Accounting is more of an Art than a Science , these principles are not immutable Laws like those in the physical sciences. Instead, they are guides to action and may change over time. Sometimes specific principles must be altered or new principles must be formulated to fit changed economic circumstances or changes in business. NATIONAL GAAP Every country has their own Version of GAAP with standards set by a national governing body. INTERNATIONAL GAAP Due to Globalisation , International Financial Reporting Standards are required and established by International Accounting Standards Committee . SEE ALSO
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