Question

What are generally accepted accounting principles? Usually established by the Internal Revenue Service. The guidelines used to resolve ethical dilemmas. Fundamental truths that can be derived from the laws of nature. A set of accounting rules and practices that have authoritative support.

Answer 1

Common Accounting Principles were established during Great Depression to cope the crisis. Securities and Exchange Commission was formed which elaborated about the bookkeeping ideologies.

Principles of orderliness, constancy, genuineness, permanence of methods, non-compensation, practicality, steadiness, periodicity, materiality and principle of good faith are the ten major accounting principles.

Statements of GAAP are not strict rules but they are the guidelines used to record the financial transactions of a business in an accurate manner.