Revised Pattern 2023 BMCC, Pune - Commerce Dept.

Deccan Education Society’s

Brihan Maharashtra College of Commerce
(AUTONOMOUS)
845, Shivajinagar, Pune - 411004

First Year B.Com

Revised Syllabus as per NEP

Sem - I

➢ Subject – Financial Accounting - I

➢ Sub Code - 1102

Prof. S. J. Kulkarni

sayalikulkarni187@gmail.com

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Compiled by S. J. Kulkarni
Revised Pattern 2023 BMCC, Pune - Commerce Dept.

GAAP
(Generally Accepted Accounting Principles)

In India, financial statements are prepared on the basis of accounting standards issued
by the Institute of Chartered Accountants of India (ICAI) and the law laid down in the
respective applicable acts (for example, Schedule III to Companies Act, 2013 should be
compulsorily followed by all companies). The ICAI also releases guidance notes from
time to time on various topics to help in the accounting process and provide clarity.
While the basic accounting principles may not directly form part of the accounting
standards and the related laws, they are assumed and expected to be universally
followed.

• GAAP is a combination of authoritative standards (set by policy boards) and the

commonly accepted ways of recording and reporting accounting information.
• GAAP aims to improve the clarity, consistency, and comparability of the
communication of financial information.
• GAAP helps govern the world of accounting according to general rules and
guidelines. It attempts to standardize and regulate the definitions, assumptions, and
methods used in accounting across all industries.
• GAAP covers such topics as revenue recognition, balance sheet classification, and
materiality.
• The ultimate goal of GAAP is to ensure a company's financial statements are
complete, consistent, and comparable. This makes it easier for investors to analyze
and extract useful information from the company's financial statements, including
trend data over a period of time. It also facilitates the comparison of financial
information across different companies.
• Generally Accepted Accounting Principles (GAAP) refers to the rules or guidelines
adopted for recording and reporting of business transactions, in order to bring
uniformity in the preparation and the presentation of financial statements.
• The Generally Accepted Accounting Principles have evolved over a long period of
time on the basis of past experiences, usages or customs, statements by individuals
and professional bodies and regulations by government agencies and have general
acceptability among most accounting professionals. However, the principles of
accounting are not static in nature. These are constantly influenced by changes in the
legal, social and economic environment as well as the needs of the users.

✓ Generally accepted accounting principles, or GAAP, are standards that encompass the
details, complexities, and legalities of business and corporate accounting. The
Financial Accounting Standards Board (FASB) uses GAAP as the foundation for its
comprehensive set of approved accounting methods and practices.
✓ GAAP compliance makes the financial reporting process transparent and standardizes
assumptions, terminology, definitions, and methods.
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Revised Pattern 2023 BMCC, Pune - Commerce Dept.

✓ External parties can easily compare financial statements issued by GAAP-compliant

entities and safely assume consistency, which allows for quick and accurate cross-
company comparisons. Because GAAP standards deliver transparency and continuity,
they enable investors and stakeholders to make sound, evidence-based decisions.
✓ The consistency of GAAP compliance also allows companies to more easily evaluate
strategic business options.

10 GAAP Principles Principle of Regularity:

1. Principle of Regularity: GAAP-compliant accountants strictly adhere to established
rules and regulations.
2. Principle of Consistency: Consistent standards are applied throughout the financial
reporting process.
3. Principle of Sincerity: GAAP-compliant accountants are committed to accuracy and
impartiality.
4. Principle of Permanence of Methods: Consistent procedures are used in the
preparation of all financial reports.
5. Principle of Non-Compensation: All aspects of an organization's performance,
whether positive or negative, are fully reported with no prospect of debt
compensation.
6. Principle of Prudence: Speculation does not influence the reporting of financial data.
7. Principle of Continuity: Asset valuations assume the organization's operations will
continue.
8. Principle of Periodicity: Reporting of revenues is divided by standard accounting
periods, such as fiscal quarters or fiscal years.
9. Principle of Materiality: Financial reports fully disclose the organization's monetary
situation
10. Principle of Utmost Good Faith: All involved parties are assumed to be acting
honestly.

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Compiled by S. J. Kulkarni