Definition of Accounting Principles
Accounting principles are the common rules that must be followed when preparing financial statements that are distributed to people outside of the company (or other organization).
Examples of Accounting Principles
The basic underlying accounting principles, guidelines and assumptions include the following:
- 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 generally accepted accounting principles (or US GAAP or GAAP).