Accounting principals and how important they are to financial structure.
What Are Accounting Principles?
Accounting principles are the rules and guidelines that companies must follow when reporting financial data. The Financial Accounting Standards Board (FASB) issues a standardized set of accounting principles in the U.S. referred to as generally accepted accounting principles (GAAP).
What is GAAP?
GAAP is the abbreviation for Generally Accepted Accounting Principles, a widely accepted standard set of accounting principles, concepts, and rules companies are required to follow in the preparation of their financial statements.
In order to enable investors, creditors, and lenders to properly compare and analyze the financial results of companies, financial statements must disclose similar information in a similar format.
GAAP is an international framework and convention of acceptable accounting practices, observed by accountants when recording and presenting a company’s financial statements.