assumptions underlying generally accepted accounting principles gaap

#Assumptions underlying generally accepted accounting principles gaap update#

The basic assumptions and principles presented on the next several pages are considered GAAP and apply to most financial statements. The current set of principles that accountants use rests upon some underlying assumptions.

The GASB develops accounting standards for state and local governments. However, the SEC usually operates in an oversight capacity, allowing the FASB and the Governmental Accounting Standards Board (GASB) to establish these requirements. Two laws, the Securities Act of 1933 and the Securities Exchange Act of 1934, give the SEC authority to establish reporting and disclosure requirements.

GAAP comprises a broad set of principles that have been developed by the accounting profession and the Securities and Exchange Commission (SEC). Inventory Errors and Financial StatementsĪccountants use generally accepted accounting principles (GAAP) to guide them in recording and reporting financial information.Inventory Systems: Perpetual or Periodic.Recording Notes Receivable Transactions.Subsidiary Ledgers and Special Journals.

#Assumptions underlying generally accepted accounting principles gaap update#

The Work Sheet When Closing Entries Update Inventory.Closing Entries for a Merchandising Company.Inventory Adjustments on the Work Sheet.Financial Statements for a Merchandising Company.The Cost of Goods Available for Sale and the Cost of Goods Sold.Net Purchases and the Cost of Goods Purchased.Generally Accepted Accounting Principles.