GAAPs

What does GAAP stand for and what is its purpose?

Generally Accepted Accounting Principles; provide a set of consistent rules for accountants to prepare financial statements.

What is the primary purpose of accounting?

To provide financial information for decision-making.

What is the Business Entity Concept?

Each business is considered a separate unit, and its financial data must be kept separate from the owner's personal financial data.

What does the Cost Principle state?

Assets are shown on the balance sheet at the cost of their acquisition.

What is the Fair Value Principle in the context of International Financial Reporting Standards?

It uses the current fair market value of the assets for financial reports.

What is the Liquidity Order?

The order in which current assets are listed on the balance sheet, based on how quickly they can be converted into cash.

What governs the order of liabilities on the balance sheet?

The Maturity date, which dictates when debts are to be repaid.

What are Codes of Ethics in accounting?

Guidelines that govern the conduct of accounting professionals, including legal and professional standards.

Who determines accounting standards in Canada?

The Accounting Standards Board.

Who determines international accounting standards?

The International Accounting Standards Board.

What must public companies in Canada follow for accounting standards?

The International Financial Reporting Standards.

What options do private businesses and not-for-profit organizations in Canada have for accounting standards?

They may choose either the Accounting Standards for Private Enterprises or the International Financial Reporting Standards.

What are the Accounting Standards for Private Enterprises based on?

The previously used GAAPs.