GENERAL KNOWLEDGE

Detailed explanation-1: -Generally accepted accounting principles, or GAAP, are standards that encompass the details, complexities, and legalities of business and corporate accounting. The Financial Accounting Standards Board (FASB) uses GAAP as the foundation for its comprehensive set of approved accounting methods and practices.

Detailed explanation-2: -The goal of these standards is to help investors and creditors better compare companies by establishing consistency and transparency. Companies are expected to follow generally accepted accounting principles when reporting their financial information. GAAP affects the following activities: Measuring economic activity.

Detailed explanation-3: -The four basic constraints associated with GAAP include objectivity, materiality, consistency and prudence. Objectivity includes issues such as auditor independence and that information is verifiable.

Detailed explanation-4: -What is GAAP? Generally Accepted Accounting Principles or GAAP is a defined set of rules and procedures that needs to be followed in order to create financial statements, which are consistent with the industry standards. GAAP helps in ensuring that financial reporting is transparent and uniform across industries.

Detailed explanation-5: -Revenue Recognition Principle. When you are recording information about your business, you need to consider the revenue recognition principle. Cost Principle. Matching Principle. Full Disclosure Principle. Objectivity Principle.