GAPP

GAPP Generally Accepted Accounting Principles (GAAPs) The common set of accounting principles, standards and procedures. GAAP is a combination of authoritative standards (set by policy boards) and the accepted ways of doing accounting. These are the rules that companies are expected to follow. If a financial statement is not prepared using GAAP principles, be very wary! That being said, keep in mind that GAAP is only a set of standards. There is plenty of room within GAAP for unscrupulous accountants to distort figures. 1. The Business Entity Concept The business entity concept provides that the accounting for a business or organization be kept separate from the personal affairs of its owner, or from any other business or organization. This means that the owner of a business should not place any personal assets on the business balance sheet. The balance sheet of the business must reflect the financial position of the business alone. Also, when transactions of the business are recorded, any personal expenditures of the owner are charged to the owner and are not allowed to affect the operating results. 2. The Continuing Concern Concept The continuing concern concept assumes that a business will continue to operate, unless it is known that it will not. The business, financial, principle, revenue, statements, must, accounting, transaction, recorded, period, information, evidence, concept, company, objective, means, values, value, time, states, personal, owner, cost, consistency, completed, change, assets, accounts, work, take, statement, source, should, same, recognition