Preview

Accounting Principles - Short Essay

Good Essays
Open Document
Open Document
695 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Accounting Principles - Short Essay
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

You May Also Find These Documents Helpful

  • Good Essays

    The four principles of account include: revenue recognition principle, matching principle, full disclosure principle, and cost principle. The revenue recognition principle states that companies should recognize revenue in the accounting period in which it is earned. The matching principle dictates that companies match expenses with revenues during the period when efforts are made to generate revenues. Full disclosure principle requires companies to disclose circumstances and events that make a difference to the financial statement users. Cost principle states companies but record assets at their own cost. Along with the four basic assumptions of accounting and the four principles of accounting, there are two constraints of accounting. These constraints are: materiality that relates to an item’s impact of the firm’s overall financial condition and operations; and conservatism which dictates when a company is in a doubt and that there company should choose the method that will be least likely to overstate assets and income.…

    • 323 Words
    • 2 Pages
    Good Essays
  • Good Essays

    ACC 460 Final Exam

    • 2807 Words
    • 14 Pages

    1) Determining whether amounts are in conformity with generally accepted accounting principles addresses the proper measurement of assets, liabilities, revenues, and expenses, which includes all of the following EXCEPT the…

    • 2807 Words
    • 14 Pages
    Good Essays
  • Powerful Essays

    accounting

    • 1187 Words
    • 5 Pages

    (A) An expression about whether financial statements conform with generally accepted accounting principles. – 8 Auditors opinion…

    • 1187 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    Generally Accepted Accounting Principles (GAAP) is a term used to refer to the standard framework of guidelines for financial accounting used in any given jurisdiction which are generally known as Accounting Standards. GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing transactions, and in the preparation of financial statements.…

    • 400 Words
    • 2 Pages
    Good Essays
  • Satisfactory Essays

    The accounting principles are generally accepted if they have been stated as such by the AICPA and the NYSE and that they are in compliance with the rules set by FASB. The principles…

    • 515 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    relate to adjusting the accounts. Matching Principles is where the expenses could be coordinated with revenues. Revenue Recognition Principle states that an accountant should acknowledged revenue because it is the principle that deals with what has been earned in the accounting period.…

    • 398 Words
    • 2 Pages
    Good Essays
  • Good Essays

    There are four principles to accounting; revenue recognition, matching, full disclosure, and cost principle. Revenue recognition shows that companies should recognize revenue in the accounting period in which it is earned. Matching principles dictates that companies match expenses with revenues in the period in which efforts are made to generate revenue. The full disclosure circumstances and events that make a difference to financial statement users. Cost principle dictates that companies record assets at their cost.…

    • 463 Words
    • 2 Pages
    Good Essays
  • Good Essays

    Accounting Principles

    • 419 Words
    • 2 Pages

    A Public Limited company is required to follow Generally accepted accounting principles in the preparation of the financial statement (The Income statement, Balance Sheet and Cash Flow Statements ).…

    • 419 Words
    • 2 Pages
    Good Essays
  • Satisfactory Essays

    Far600

    • 699 Words
    • 3 Pages

    - A set of broad principles that provide a general frame of reference by which accounting practice can be evaluate & guides the development of new practice & procedures.…

    • 699 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    b) Developing standards are correspondence with the same conceptual framework. It is necessary to establish an accounting law or principle to regulate these economic actions more specific, similar issues are treated identified, different issues are treated distinguished. two separate enterprises can account the financial report in the same way relate to one course of action in economy.…

    • 313 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    ACC1002 notes

    • 889 Words
    • 5 Pages

    The matching (expense recognition) principle is one of the cornerstones of the accrual basis of accounting. Under this principle, when you record revenue, also record at the same time any expenses directly related to the revenue. Thus, if there is a cause-and-effect relationship between revenue and the expenses, record them in the same accounting period.…

    • 889 Words
    • 5 Pages
    Satisfactory Essays
  • Good Essays

    Answer: Before I dissect the term “accounting principle,” I first want to provide a brief definition of (1) accounting and (2) a principle. Accounting is the systematic recording, reporting, and analysis of financial transactions of a business and a principle is a rule or ethical standard. The definition of an accounting principle is a principle that governs current accounting practice and that is used as a reference to determine the appropriate treatment of complex transactions (InvestorWords.com).…

    • 680 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    ABFA3134 Financial Accounting Framework 2 DAC - 2013/2014 My Name: Soo Kee Heng Room: R105 Consultation Hours: TBC Structure of the course: 3 Hours Lecturer per week 2 Hours Tutorial per week Coursework 40% [Week 6 & 9] Examination 60% Contents: 7. Framework Property, Plant & Equipment Impairment of Assets Intangible Assets Inventories Financial Statements…

    • 739 Words
    • 3 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Financial accounting relies heavily on the principles, assumptions and the constraints to perform accurately and universally. Without the standards set forth by the GAAP everyone would record…

    • 308 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    The parade of corporate accounting scandals of the last decade, with lion’s share occurring in 2002, has developed deep antipathy and distrust towards corporations and their reporting practices, and casted doubts on the opinions of audit firms. As majority of these accounting frauds occurred in the US (See Appendix), there was a widely-held view that rules-based accounting standards have allowed failure of large corporations like Enron and World Com, since US GAAP is perceived to emphasize on the rules-based approach to standards setting. This in its turn has put enormous pressure towards the US regulators and standard setters to relook into roots of accounting standards to regain public confidence and investor trust in the financial markets (Lev, 2012).…

    • 3207 Words
    • 13 Pages
    Good Essays