![]() It can be said that when a transaction is recorded, debit amount has to be equal to the credit amount. As per this concept, for every debit, there is a corresponding credit. The money measurement concept augments the true understanding of the state of affairs of the business.ĭual Aspect Concept: This is the fundamental concept of accounting. If the events or transactions cannot be expressed in monetary value, however important they are, they are not recorded in accounts. Money Measurement Concept: Accounting records of only those transactions that can be expressed, in terms of money, though quantitative records are kept, additionally. The personal activities of possessors and other business entities are accounted for separately unless the activities have direct impact on business firm. It has been established that only business entity's actions and transactions must be recorded and reported. The separate entity concept: From an accounting perspective, the business company is treated as a separate economic entity. These financial statements must conform to the rules established by FASB (McCrary, 2009). Registered public companies and several private investment companies are required to publish audited statements. ![]() It has been revealed in accounting literature that most companies must publish annual audited financial statement. GAAP is used as a rule to offer comprehensive information for organization's fiscal returns, current balance and any outstanding debt. The SEC articulated its resolve to fully accept IFRS in the U.S. As of 2010, the convergence project was in progress with the FASB meeting regularly with the IASB. to discard GAAP in the future and to join more than 100 countries at global level already using the London-based IFRS. In 2008, the SEC issued an introductory plan that may lead the U.S. Circa 2008, the FASB issued the FASB Accounting Standards Codification, which updated the thousands of US GAAP statements into approximately 90 accounting topics. ![]() In 1973, the Accounting Principles Board was replaced by the FASB under the supervision of the Financial Accounting Foundation with the Financial Accounting Standards Advisory Council serving to recommend and provide input on the accounting standards. The AICPA first formed the Committee on Accounting Procedure in 1939, and substituted it with the Accounting Principles Board in 1951. Historical framework of Generally Accepted Accounting Principles: traditionally, accounting standards have been established by the American Institute of Certified Public Accountants (AICPA) subject to Securities and Exchange Commission regulations. Presently, the Financial Accounting Standards Board (FASB) set up generally accepted accounting principles for public and private companies, as well as for non-profit organizations. Securities and Exchange Commission (SEC) necessitates that US GAAP be followed in financial reporting by publicly traded companies. GAAP in U.S.: The United States government does not openly establish accounting standards by law. GAAP is not considered as a sole accounting law, but it is a collective of many rules on how to account for different transactions. GAAP is a codification of how CPA firms and company plan and present their business income and expenditure, assets and liabilities in their financial statements. ![]() Generally Accepted Accounting Principles (GAAP) is based on those rules of action or conduct, which are derived from experience and practice, and when they confirm useful, they are accepted as principles of accounting. The notion of Generally Accepted Accounting Principle includes the standards, conventions, and rules that accountants pursue in recording and summarizing accounting transactions, and in the preparation of financial statements. These are normally known as accounting standards. Generally Accepted Accounting Principles (GAAP) is described by management theorists as the standard framework of guiding principle for financial accounting used in any given authority. ![]()
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