![]() This principle states that revenue must be recognized one when the goods and services are provided to the customer. The second one is called the revenue recognition principle or rev-rec. What is the Revenue Recognition Principle? So, if you purchase a piece of land for ten thousand dollars, but it's actually valued at fifteen thousand dollars at the time of purchase, and you have it still five years later and it's appreciated up to twenty five thousand dollars, it's still going to be on your books at ten thousand dollars (the original purchase amount). ![]() The measurement principle states that accounting information is based on actual value and not what we think it's worth, not what it's appraised for, not what it actually cost us. So the first one we're going to talk about is what's called the measurement principle. If it doesn't follow one of these four principles, then it's really not following accounting. There are four main principles of GAAP that we follow throughout all of accounting. GAAP contains a set of accounting standards, principles, and procedures that accountants and accounting companies must follow.īack to: Accounting & Taxation What are the Types of GAAP Accounting Principles? ![]() Generally accepted accounting principles (GAAP) is an embodiment of rules and standards that are acceptable and practiced in the accounting industry. IFRS What are Generally Accepted Accounting Principles? Update Table of Contents What are Generally Accepted Accounting Principles? Who Created GAAP? How are Generally Accepted Accounting Principles Used? GAAP vs.
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