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
- materiality, conservatism, consistency, and others
The U.S. accounting principles also include the many complex, detailed rules or standards that are established and maintained by the Financial Accounting Standards Board (FASB). These are organized in the FASB’s Accounting Standards Codification (ASC).
The combination of the basic underlying guidelines and the complex detailed accounting standards are referred to as generally accepted accounting principles (GAAP or US GAAP).
