assumptions underlying generally accepted accounting principles gaap

Recognition-what items should be recognized in the financial statements (for example as assets, liabilities, revenues, and expenses).For companies or not-for-profits, GAAP is set with the objective of providing information that is useful to investors, lenders, or others that provide or may potentially provide resources.Īn additional objective applies to financial reporting for state and local governments: to provide information that enables taxpayers and others who use governmental financial statements to hold governments accountable. The standards are known collectively as Generally Accepted Accounting Principles-or GAAP.įor all organizations, GAAP is based on established concepts, objectives, standards and conventions that have evolved over time to guide how financial statements are prepared and presented. The accounting standards developed and established by the Financial Accounting Foundation’s (FAF) standard-setting Boards-the Financial Accounting Standards Board (FASB) and the Governmental Accounting Standards Board (GASB)-determine how those financial statements are prepared. Results of operations (statement of revenues, expenses and changes in net position, statement of comprehensive income, etc.), and.Financial position (balance sheet, statement of net position).Specifically, financial reporting includes the following information:

Financial reporting is the language that communicates information about the financial condition and operational results of a company (public or private), not-for-profit organization, or state or local government.

Assumptions underlying generally accepted accounting principles gaap