GAAP Principles

Going Concern

The accounting assumption that a business is expected to operate indefinitely.

Business Entity

financial information is recorded and reported separately from the owner's personal financial information

Historical Cost

the actual amount paid for merchandise or other items bought is recorded

Objective Evidence

a source document is prepared for each transaction

Consistent Reporting

The same accounting procedures must be followed in the same way in each accounting period.

Unit of Measurement

Business transactions are reported in numbers that have common values—that is, using a common unit of measurement.

Accounting Period Cycle

accounting data be recorded and summarized in financial statements for equal periods of time (month, quarter, year, etc.).

Adequate Disclosure

Financial statements contain all information necessary to understand a business's financial condition.

Matching Expenses with Revenue

expenses are matched against the revenues they generated and recorded in the same accounting period.

Realization of Revenue

revenue is considered "earned" and recorded when prices are negotiated, goods or services are delivered, or there is a reasonable expectation of payment.