WELCOME TO MY PRESENTATION

GENERALLY ACCEPTED ACCOUNTING

PRINCIPLES (GAAP)
 Refer to a common set of accounting principles, standards,
concepts, guidelines and procedures that

 Guide the more detailed and comprehensive accounting rules,

practices, and standards.

 Issued by the Financial Accounting Standards Board (FASB)

 GAAP

All the transactions in the

01 financial statements should
be in the same currency unit

Single Entity Principle

Monetary Unit Principle

States that all financial records of

the business should be separate
02
from the owners or other businesses
 GAAP
03 States that a company should record
both revenue and expenses when
Specific Time Period earned and not when it gets the cash.
Principle

Recognition
Principle
States that a business should
report their financial statements
04
appropriate to a specific time
period.
 GAAP

States that companies do not hide

05 any information, which can impact
the decision of the stakeholders

Going Concern Principle

Full Disclosure Principle

As per this principle, it is

assumed that business has no
06
end date. It will go on for ever.
 GAAP
States that the transactions and
07 events that have insignificant
effects, should not be recorded and
reported in the financial statements.
Matching Principle

Principle of Materiality
States that the expenses incurred
during a period be recorded in the
08
same period in which the related
revenues are earned.
 GAAP
A company should record the
purchase the goods, services,
or capital assets at the price they
09
actually paid for it.

Principle of Conservative
Accounting

Historical Cost Principle

Recognizes and records expenses

and liabilities as soon as possible 10
but recognizes revenues and
assets when they are assured of
being received.
 Conclusion

 Though the objective of GAAP principles is to improve transparency,

there is no guarantee that the financial statements are free from errors
and omissions.

 So, even if a company follows GAAP, it is always better to scrutinize its

financial statements.