What is the Concept of Accounting Principles?
Accounting principles are the foundation of modern accounting. Accounting has been enhanced to meet practical needs because it is a practical science.
Accounting has always been up to date in order to present users of accounting information (e.g., owners, investors, lenders, creditors, management authorities) with accurate, and comparable information, as well as other necessary information such as financial results and financial condition of the organization.
That is why accounting enthusiasts, professional accountants, and professional accounting firms have attempted to discipline accounting using certain simple and universally accepted principles (accounting concepts and conventions).
All of these principles (concepts and conventions) are referred to as universally accepted accounting principles (GAAP) in accounting.
These concepts are not laws, but they are close to them. The primary goal of accounting principles (concepts and conventions) is to:
- Presentation of financial statements to users in a clear and understandable manner.
- To present an organization’s accounting data in a way that is comparable to that of other businesses in the same industry.
It’s worth noting that accounting principles (concepts and conventions) haven’t improved overnight.
These policies have steadily spread and achieved recognition based on demand, thanks to the traders’ expertise.
This policy was developed by the Financial Accounting Standards Board (FASB) of the United States and the Securities and Exchange Commission (SEC) of the United States, which is followed by accountants in all countries throughout the world.
You can also read:
- 5 Important Accounting Conventions [Notes with PDF]
- Top 7 organizations that influencing accounting principles
- 9 Important Accounting Concepts
- Why is accounting called the language of business?
- 9 major branches of accounting
