1. Generally Accepted Accounting Principles

Generally Accepted Accounting Principles

1.  GAAP is a collection of commonly followed accounting rules and standards in the preparation of financial statements. 
2. GAAPs are generic in nature and every country has its own GAAP, Example UK GAAP, US GAAP.
3.  In India, we have Indian Accounting Standards which are more specific to Indian Accountants.
4. These principles are referred to as concepts or principles.
5. Accountants are prepared on the basis of the principles laid down by IFRS.
6. IFRS helps in Financial statements comparison, uniformity and analysis.
7. The standards are prepared by the Financial Accounting Standards Board (FASB)
8. These principles are constantly changing due to changes in the external environment (legal, social and economic environment)
9. Cost basis principle requires that assets will be shown in the financial statements “on cost” i.e. on the purchase price. This has to be supported with the bill or voucher for correctness and trueness.