Accounting Principles - Short Essay

Topics: Generally Accepted Accounting Principles, Income statement, Balance sheet Pages: 3 (695 words) Published: February 18, 2012
SUBJECT:
ANALYSIS OF FINANCIAL STATEMENT
TOPIC:
ACCOUNTING PRINCIPLES

ACCOUNTING
Generally Accepted Accounting Principles refer to the standard framework of guidelines for financial accounting used in any given jurisdiction; generally known as accounting standards. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing, and in the preparation of financial statements. Financial Accounting is information that 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 "Generally Accepted Accounting Principles".

Principles derive from tradition, such as the concept of matching. In any report of financial statements (audit, compilation, review, etc.), the preparer/auditor must indicate to the reader whether or not the information contained within the statements complies with Generally Accepted Accounting Principles.

Accounting is an art of regulating, classifying and summarizing in a significant manner and in terms of money, transactions and events which are in part at least, of a financial character and interpreting the results thereof.

PRINCIPLES OF ACCOUNTING
Principles derive from tradition, such as the concept of matching. In any report of financial statements (audit, compilation, review, etc.), the preparer/auditor must indicate to the reader whether or not the information contained within the statements complies with Generally Accepted Accounting Principles. 1. Principle of regularity:

Regularity can be defined as conformity to enforced rules and laws.

2. Principle of consistency:
This principle states that when a business has once fixed a method for the accounting treatment of an item, it will enter all similar items that...
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