Advantages of generally accepted accounting principles
Answers
“……….Generally Accepted Accounting Principle incorporate the consensus at a particular time as to which economic resource and obligations should be recorded as assets and liabilities by financial accounting, which changes in assets and liabilities should be recorded, when these changes should be recorded, how the assets and liabilities and changes in them should be measured, what information should be disclosed and how it should be disclosed, and which financial statements should be prepared. It also states that GAAP encompass the conventions, rules and procedures necessary to define accepted accounting practice at a particular time……………… include not only broad guidelines of general application, but also detailed practice and procedures.”
However, the Accounting Principle Board (APB), USA, states that “GAAP are conventional —that is, they become generally accepted by agreement (often tacit agreement) rather than by formal derivation from a set of postulates or basic concepts. The principles have been developed on the basis of experience, reason, custom, usage, and to a significant extent, practical necessity.”