Accounting principles are the rules and guidelines that companies must follow when reporting financial data. The Financial Accounting Standards Board (FASB) issues a standardized set of accounting principles in the U.S. referred to as generally accepted accounting principles (GAAP). Some of the most fundamental accounting principles include the following:
Accrual principle Conservatism principle Consistency principle Cost principle Economic entity principle Full disclosure principle Going concern principle Matching principle Materiality principle Monetary unit principle Reliability principle Revenue recognition principle Time period principle
Accounting standards are implemented to improve the quality of financial information reported by companies. Accounting principles help govern the world of accounting according to general rules and guidelines. GAAP attempts to standardize and regulate the definitions, assumptions, and methods used in accounting.