3. Gaap stands for generally accepted
Accounting principles.
Gaap are some type of rules &
accountant must be familiar with
acceptable reference sources in
order to decide whether any
particular accounting principles has
substantial authoritative support.
4. In general securities of exchange 1934 was
intended to regulate securities trading on the
national exchanges ,& it was under this
authority that the SEC was created.SEC has
authority to determine GAAP & to regulate
the accounting profession.
The formal process of developing
accounting principles that exists today in US
began with the securities act of 1933 &
1934.The securities act of 1933 was
designed to protect investors from abuses in
financial reporting that developed during the
1920s.
5.
6.
7.
8.
9. Business entity
Going concern
Time period
Monetary unit
Historical cost
Matching concept
Full disclosure
Cash basis
Accrual basis
Realization
Industry practice
10. business
entity:
• The entity for which the financial statements are
prepared is separate & distinct from the owners of the
entity.
Going
concern:
• include the infinite time period…provides perspective
on future of entity.
Time
period:
• discuss the time period in starting the period…
Monetary
unit:
• Yard, a gallon & money of the possible standards of
measure…
Historical
cost:
• The price of asset in the balance sheet is based on its
original cost when acquired by the company.
11. Matching concept
• Match the revenue & expenses which
recorded in accounting period…
full disclosure:
• No include the hidden information…
cash basis:
• Records the transaction when cash
receive & payed…
Accrual basis:
• It record when transaction are
occurred.
12. Industry practices:
Some industry practices lead to accounting
reports that do not conform to the general
theory that underlies accounting.
Realization:
Realization is assumed to occur when the
seller receives cash or a claim to cash in
exchange for goods /services.
