GAAPs

The Business Entity Concept

The accounting for a business organization must be kept separate from the personal affairs of its owner, or any other business or org.

The Continuing Concern Concept

Assumes that a business will continue to operate unless it is known that it will not

The Principle of Conservatism

Accounting for a business should be fair and reasonable

The Objectivity Principle

Accounting will be recorded on the basis of objective evidence —> source docs

The Revenue Recognition Convention

Revenue must be recorded in the accounts (recognized) at the time the transaction is completed

The Time Period Concept

Accounting will take place over specific time periods known as fiscal periods

The Matching Principle

Each expense item related to revenue earned must be recorded in the same period as the revenue it helped to earn

The Cost Principle

accounting for purchases must be at the cost price to the purchaser