Generally Accepted Accounting Principles Essay example

Generally Accepted Accounting Principles Essay example

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There are general rules and concepts that preside over the field of accounting. These general rules, known as basic accounting principles and guidelines, shape the groundwork on which more thorough, complex, and legalistic accounting rules are based. The Financial Accounting Standards Board (FASB) uses the basic accounting principles and guidelines as a foundation for their own comprehensive and complete set of accounting rules and standards.
GAAP is exceptionally useful because it attempts to regulate and normalize accounting definitions, assumptions, and methods. Because of generally accepted accounting principles one is able to presuppose that there is uniformity from year to year in the methods that are used to prepare a company's financial statements. And even though variations might exist, one can make realistically confident conclusions when comparing one company to another, or when comparing one company's financial statistics to the statistics for the industry as a whole. Over the years the generally accepted accounting principles have become more multifaceted because financial transactions have become more intricate (Accounting Principles, 2011).
One theory that is used in accounting is that of Conservatism. This notion states that all liabilities should be accounted for even if there is a possibility that they will never take place. This same principle applies to liabilities but not to revenues. The only revenues that can be accounted for are the ones that have already taken place. Any liability that might happen should be recorded and at the higher possible amount. For instance, if a company is sued for any reason and the legal department determines that the possible liability to pay claims will be somew...


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...things are supposed to be done. In my research I hope to use these theories and principles to develop new ways of doing things so that the entire accounting field can benefit. But in order to do this I have to be aware of what the rules are and how they are applied so that anything I discover will be sure to adhere to the already accepted principles.
In order to advance a field and develop new concepts it is vital that one understands what has already been proposed and looked at in the past. This is why understanding the theories and principles that are already in place are so very important. There is no point in trying to reinvent the wheel if it is really not necessary. A good researcher should be able to develop what has already been done in order to move forward the thinking within the discipline. This is what I hope to be able to do with my research.

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