GAAP

Generally Accepted Accounting Principles

Like everything else in the world, accountants have to follow rules as well.  Generally accepted accounting principles (GAAP’s) are a set of rules and procedures that accountants must follow when preparing financial statements.

GAAP – The Business Entity Concept

The business entity concept provides that the accounting for a business organization must be kept separate from the personal affairs of its owner, or from any other business or organization.

GAAP – The Continuing Concern Concept

The continuing concern concept assumes that a business will continue to operate unless it is known that it will not.  This is also known as the going concern concept. 

GAAP – The Principle of Conservatism

The principle of conservatism provides that accounting for a business should be fair and reasonable.