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Gaap

Uploaded by

jamshid44elham77
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Generally Accepted Accounting Principles

Financial accounting is governed by concepts and rules known as Generally Accepted


Accounting Principles (GAAP). We must understand these principles to best use accounting
data.

GAAP aims to make information relevant, reliable, and comparable. Relevant information
affects decisions of users. Reliable information is trusted by users. Comparable information is
helpful in contrasting organizations.

 In the United States, the Securities and Exchange Commission (SEC), a


government agency, has the legal authority to set GAAP.
 Financial Accounting Standards Board (FASB), which is a private-sector group
that sets both broad and specific principles.

Accounting Concepts
1. The Measurement Concept: also called the cost principle, usually prescribes that
accounting information is based on actual cost. The cost principle emphasizes reliability
and verifiability, and information based on cost is considered objective. Objectivity means
that information is supported by independent, unbiased evidence; it demands more than a
person’s opinion.
2. The Revenue Recognition Concept: Revenue is recognized when earned.
3. The Expense Recognition Concept: also called the matching principle, prescribes that a
company record the expenses it incurred to generate the revenue reported.
4. The Full Disclosure Concept: Prescribes that a company report the details behind
financial statements that would impact users’ decisions. Those disclosures are often in
footnotes to the statements.

Accounting Assumptions

1. The going-concern assumption means that accounting information reflects a


presumption that the business will continue operating instead of being closed or sold.
2. The monetary unit assumption means that we can express transactions and events in
monetary, or money, units.
3. The time period assumption presumes that the life of a company can be divided into
time periods, such as months and years, and that useful reports can be prepared for those
periods.
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4. The business entity assumption means that a business is accounted for separately from
other business entities, including its owner. The reason for this assumption is that
separate information about each business is necessary for good decisions.

International Standards

In today’s global economy, there is increased demand by external users for comparability in
accounting reports. This demand often arises when companies wish to raise money from
lenders and investors in different countries. To that end, the International Accounting
Standards Board (IASB), an independent group (consisting of individuals from many
countries), issues International Financial Reporting Standards (IFRS) that identify
preferred accounting practices.

List of International Financial Reporting Standards (IFRS)

No Code Title
1 IFRS 1 First-time Adoption of International Financial Reporting Standards
2 IFRS 2 Share-based Payment
3 IFRS 3 Business Combinations
4 IFRS 5 Non-current Assets Held for Sale and Discontinued Operations
5 IFRS 6 Exploration for and Evaluation of Mineral Resources
6 IFRS 7 Financial Instruments: Disclosures
7 IFRS 8 Operating Segments
8 IFRS 9 Financial Instruments
9 IFRS 10 Consolidated Financial Statements
10 IFRS 11 Joint Arrangements
11 IFRS 12 Disclosure of Interests in Other Entities
12 IFRS 13 Fair Value Measurement
13 IFRS 14 Regulatory Deferral Accounts
14 IFRS 15 Revenue from Contracts with Customers
15 IFRS 16 Leases
16 IFRS 17 Insurance Contracts

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List of International Accounting Standards (IAS)

No Code Title
1 IAS 1 Presentation of Financial Statements
2 IAS 2 Inventories
3 IAS 7 Statement of Cash Flows
4 IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
5 IAS 10 Events after the Reporting Period
6 IAS 12 Income Taxes
7 IAS 16 Property, Plant and Equipment
8 IAS 19 Employee Benefits
9 IAS 20 Accounting for Government Grants and Disclosure of Government
Assistance
10 IAS 21 The Effects of Changes in Foreign Exchange Rates
11 IAS 23 Borrowing Costs
12 IAS 24 Related Party Disclosures
13 IAS 26 Accounting and Reporting by Retirement Benefit Plans
14 IAS 27 Separate Financial Statements
15 IAS 28 Investments in Associates and Joint Ventures
16 IAS 29 Financial Reporting in Hyperinflationary Economies
17 IAS 32 Financial Instruments: Presentation
18 IAS 33 Earnings per Share
19 IAS 34 Interim Financial Reporting
20 IAS 36 Impairment of Assets
21 IAS 37 Provisions Contingent Liabilities and Contingent Assets
22 IAS 38 Intangible Assets
23 IAS 39 Financial Instruments: Recognition and Measurement
24 IAS 40 Investment Property
25 IAS 41 Agriculture

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