GAAP

Collection of commonly followed accounting rules and standards used by accountants to guide them in recording financial information

Otherwise known as Reliability meaning accounting information must be free from material error, verifiable and recorded on the basis of objective evidence

Also known as "Adequate disclosure" which states that any and all information that affects the full understanding of a company's financial statements must be included.

It simply means that the personal transaction of the owner should be kept separated from the accounting records of the business.

Three classifications of Time or Accounting period are:

This principle states that assets or properties acquired must be recorded based on the actual purchasing cost not on estimated cost.

This refers to financial reporting which is only concerned with information that is significant enough to affect evaluations and decisions.

This principle assumes that a business will continue to operate for the foreseeable future.

Revenues are recognized when earned or at the time the transaction is completed and expenses are recorded when incurred.

GAAP means ________________