Friday, July 24, 2015

GAAP Concepts and Assumptions

Adhering to the Generally Accepted Accounting Principles is critical to the accounting industry. The GAAP was created particularly as a way to ensure accurate and effective maintenance and production of financial reporting for both individuals and businesses throughout the United States. The GAAP is composed of basic principles, assumptions, and constraints.

Each of the unique concepts provides the GAAP its fundamental foundation. In fact, that are four basic concepts and assumptions to consider such as the business entity, going concern, monetary unit, and the period principle. The first assumption is that the business is, in fact, separate from both its owners and from other companies. It is in fact based on revenue and expenses and should, therefore, be kept separate from those of personal nature. The 2nd assumption states that the company in question will operate indefinitely to be successful. The assumption validates such methods as asset capitalization, amortization, and depreciation. 3rd, the GAAP assumption here is that a stable currency is going to be constantly the company's unit of record. The US Dollar value is typically the accepted unit of record by the FASB. This implies that a company's economic activities can be separated into artificially created time periods.

Stephen Souky understands the importance of adherence to GAAP and as a successful accounting professional he is someone who possesses a significant level of knowledge and skill and expertise. Especially when it comes to personal and corporate accounting, Stephen can provide organizations the services and management they need to meet their financial objectives successfully. He is skilled at ensuring strong financial security well into the future.