Balance sheets are reported on a certain date. Income statements have a start date and an end date. The Specific Time Period Principleįinancial statements always pertain to a specific time. Companies who conduct parts of their businesses in foreign currencies have to convert the amounts in US dollars using the prevalent exchange rate while reporting their financial statements. In the United States, all the numbers have to be expressed in US dollars. The Specific Currency PrincipleĪ currency is specified for reporting the financial statements. In legal terms, a business can exist long after the existence of its promoters or owners. All its activities are treated separately from that of its owners. The Business as a Single Entity ConceptĪ business is a separate entity in the eyes of the law. The Principle of Conservative Accountingġ. 1 There are ten GAAP principles that make up these standards:.There are ten GAAP principles that make up these standards: But the SEC still continues to have enforcement powers. Along the way, the governing boards have changed as well and in the current era, it is the Financial Accounts Standards Board or FASB that decide the rules of accounting. The evolution of these accounting standards has taken more than half-a-century and changes are being made even today. The SEC in turn asked the American Institute of Accountants for help in order to examine financial statements and 1936 the concept of GAAP was spoken about for the first time. Thus, the Securities and Exchange Commission or SEC was formed with a mission to regulate financial practices. Faith in the economy was at an all-time low and the government of that time decided that something had to be done to rebuild that faith. The origins of GAAP or Generally Accepted Accounting Principles go all the way back to 1929 and the stock market crash that caused the Great Depression.
The Ten Generally Accepted Accounting Principles ( GAAP)
0 kommentar(er)
