GAAP

GAAP

generally accepted accounting principles

business entity concept

the financial affairs of the business must be separate to the owners financial affairs

historical cost concept

all assets must be recorded at their or

the going concern concept

assume business will continue operating in the foreseeable future

matching principle

calculating net profit for accounting period/year by matching in the accounting period regardless of cash

prudence principle

accountants shouldn’t overstate their assets/ profits

materiality

any important item must be shown separately on financial statements e.g interest on expense