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Generally Accepted Accounting Principles (GAAP) [a] is the accounting standard adopted by the U.S. Securities and Exchange Commission (SEC), [1] and is the default accounting standard used by companies based in the United States.
Accounting, also known as accountancy, is the process of recording and processing information about economic entities, such as businesses and corporations. [1] [2] Accounting measures the results of an organization's economic activities and conveys this information to a variety of stakeholders, including investors, creditors, management, and regulators. [3]
The philosophy of accounting is the conceptual framework for the professional preparation and auditing of financial statements and accounts.The issues which arise include the difficulty of establishing a true and fair value of an enterprise and its assets; the moral basis of disclosure and discretion; the standards and laws required to satisfy the political needs of investors, employees and ...
Prior to 1929 no group – public or private – was issuing or responsible for any accounting [4] standards. After the 1929 stock market crash, a call to regain the public's confidence and investor's trust was demanded and the Securities and Exchange Act of 1934 was passed resulting in public companies being supervised by the U.S. Securities and Exchange Commission.
Financial accounting is a branch of accounting concerned with the summary, analysis and reporting of financial transactions related to a business. [1] This involves the preparation of financial statements available for public use.
Generally Accepted Auditing Standards, or GAAS are sets of standards against which the quality of audits are performed and may be judged. Several organizations have developed such sets of principles, which vary by territory.
The notable limitations of accounting standards are their inflexibility, time-consuming process to create them, the difficulty of choosing between alternative treatments and their restrictive scope. [3]
In accounting, the revenue recognition principle states that revenues are earned and recognized when they are realized or realizable, no matter when cash is received.. It is a cornerstone of accrual accounting together with the matching principle.