The document outlines generally accepted accounting principles (GAAP) and basic accounting concepts, emphasizing their importance in financial reporting. It details fundamental concepts such as the entity concept, periodicity, and going concern, along with key principles like objectivity, consistency, and materiality. Additionally, it discusses the purpose of a conceptual framework for financial reporting, its users, and its role in enhancing transparency and accountability.

1. Accounting Principles and
Concepts
By:
MR. FREDDY CASAS NAVARRO, CMITAP, MBA
Course Instructor

2. Lesson Objectives:
• Define generally accepted accounting principles (GAAP)
• Know and appreciate the basic accounting principles used in the
practice of accounting

3. GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (GAAP)
• These are broad, general statements or rules and procedures that
serves as guide in the practice of accounting.
• These are standards, assumptions, and concepts with general
applicability.
• These are measurement techniques and standards used in the
presentation and preparation of Financial Statements.

4. Fundamental Concepts
1. Entity concept- regards the business as separate and distinct from
its owners and from other business enterprise.
2. Periodicity- concept behind providing financial accounting
information about the economic activities of an enterprise for
specified time periods.
a. Calendar year- 12-month period starts on Jan. 1 and ends Dec.
31.
b. Fiscal year- 12-month period starts any of the month of the
year and ends 12-months after the starting period.
Ex. May 1, 2016- April 30, 2017

5. • Going Concern- is a concept which assumes that the business
enterprise will continue to operate indefinitely.

6. Basic Accounting Principles
• Objectivity principle- states that all business transactions that will be
entered in the accounting records must be supported by verifiable
evidence.
• Historical cost- means that all properties and services acquired by the
business must be recorded at their original acquisition cost.
• Accrual principle- states that income is recognized at the time it is
earned and expenses recognized at the time the incurred

7. • Adequate disclosure – states that all material facts that will
significantly affect the financial statements must be indicated.
• Materiality- means that financial reporting is only concerned with the
information significant enough to affect decisions.
• Consistency- means that approaches used in reporting must be
uniformly employed from period to period allow comparison of
results between time periods.

8. CONCEPTUAL FRAMEWORK: Objective of
Financial Reporting
• To know the nature of the Revised Conceptual Framework
• To describe the purpose and usefulness of a conceptual framework
• To understand the authoritative status of a conceptual framework
• To understand the objective of financial reporting
• To know the limitations of financial reporting

9. Conceptual Framework
The conceptual framework for Financial Reporting is a complete,
comprehensive and single document, promulgated by the International
Accounting Standards Board.
The conceptual framework is a summary of the terms and concepts
that underlie the preparation and presentation of financial statements
for the external users. In other words, the conceptual framework
describes the concepts for general purpose financial reporting.

10. What it provides?
• Contribute to transparency
• Strengthen accountability
• Contribute to economic efficiency

11. Users of Financial Information
• Primary Users- are the parties to whom general purpose financial
reports are primarily directed. These are the following:
a. Existing and potential investors, lenders, and other creditors

12. Other users
• These are users of financial information other than the existing and
potential investors. These are the following:
a. Employees
b. Customers
c. Government and their agencies
d. Public