Accounting principles are the common rules that must be followed when preparing financial statements that will be distributed to people outside of the company (or other organization).
The accounting principles include the basic underlying guidelines and assumptions such as the cost principle, matching principle, full disclosure principle, revenue recognition principle, industry-specific regulatory rules, materiality, conservatism, consistency, and others.
In the U.S. the accounting principles also include the many complex detailed rules that are established and maintained by the Financial Accounting Standards Board (FASB).
The combination of the basic underlying guidelines and the complex detailed accounting rules are referred to as US GAAP or GAAP. GAAP is the acronym for generally accepted accounting principles.
View Our Course Outline