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10 GAAP Principles

The document outlines the 10 GAAP principles essential for accounting practices, including the principles of regularity, consistency, sincerity, and full disclosure. Each principle emphasizes the importance of transparency, comparability, and integrity in financial reporting. Adhering to these principles ensures accurate financial representation and builds trust among stakeholders.

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rkingdom025
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10 views1 page

10 GAAP Principles

The document outlines the 10 GAAP principles essential for accounting practices, including the principles of regularity, consistency, sincerity, and full disclosure. Each principle emphasizes the importance of transparency, comparability, and integrity in financial reporting. Adhering to these principles ensures accurate financial representation and builds trust among stakeholders.

Uploaded by

rkingdom025
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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10 GAAP PRINCIPLES www.fmworldcup.

com

1. PRINCIPLE OF REGULARITY 2. PRINCIPLE OF CONSISTENCY

Accountants must strictly adhere to established rules Use the same accounting methods over time unless a
and standards. change is justified.
WHY IT MATTERS: WHY IT MATTERS:

Ensures consistency and compliance across all Enables meaningful comparison of financial
reporting periods. statements across periods.

3. PRINCIPLE OF SINCERITY 4. PRINCIPLE OF PERMANENCE OF METHODS

Financial statements should reflect an honest and Consistent application of accounting procedures (e.g.,
impartial picture of the company’s financial performance. same depreciation method).
WHY IT MATTERS: WHY IT MATTERS:

Builds trust with investors, auditors, and stakeholders. Supports comparability and avoids manipulation of
results.

5. PRINCIPLE OF NON-COMPENSATION 6. PRINCIPLE OF PRUDENCE


Don’t offset liabilities with assets or expenses with Report expenses and liabilities as soon as possible; only
revenues unless specifically allowed. recognize revenues when they’re assured.
WHY IT MATTERS: WHY IT MATTERS:

Prevents misleading presentation of net values. Promotes caution and prevents overstatement of
financial position.

7. PRINCIPLE OF CONTINUITY 8. PRINCIPLE OF PERIODICITY


Assume the business will continue to operate indefinitely Financial reporting should be done for specific time
unless there’s evidence to the contrary. periods (monthly, quarterly, yearly).
WHY IT MATTERS: WHY IT MATTERS:

Affects asset valuation, depreciation schedules, and Enables timely analysis and comparisons over time.
long-term decisions.

9. PRINCIPLE OF FULL DISCLOSURE 10. PRINCIPLE OF UTMOST GOOD FAITH

All relevant and necessary information should be All involved parties are assumed to act honestly and
disclosed in financial reports. disclose all relevant information.
WHY IT MATTERS: WHY IT MATTERS:

Allows users to make informed decisions and assess Critical for maintaining integrity in financial and
risk properly. business transactions.

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