会计专业英语_会计专业英语10
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Generally accepted accounting principles, or GAAP as they are more commonly known, are rules for the preparation of financial statements.Every publicly traded company must release their financial statements each year.These statements are used by investors, banks and creditors to determine the financial health of the company and its suitability for investment or extension of credit.In order to properly compare and evaluate companies and their results, the financial statement must provide similar information in a similar format.Every country has its own generally accepted accounting principles, and all publicly released financial statements must comply with these rules..Although there is no comprehensive list of generally accepted accounting principles, the structure is based around four key aumptions, four basic principles and four basic constraints..Four Key Aumptions
The key aumptions in generally accepted accounting principles are: busine entity, going concern, monetary unit and time period principle.The busine entity aumption is the idea that the busine functions as a legal and financial entity separate from its owners or any other busine.This aumption means that all the amounts shown as revenue or expense in the financial statements are for the busine alone and do not include any personal expenses.“Going concern” is the aumption that the busine will operate for the foreseeable future.This is important when calculating the values for aets, depreciation and amortization.The monetary unit aumption is that all the amounts listed use one stable currency, and that any amounts in another currency are clearly listed.“Time period” aumes that all the transactions reported did in fact occur within the time period as listed.Four Basic Principles
The four basic principles in generally accepted accounting principles are: cost, revenue, matching and disclosure.The cost principle refers to the notion that all values listed and reported are the costs to obtain or acquire the aet, and not the fair market value.The revenue principle states that all revenue must be reported when is it realized and earned, not necearily when the actual cash is received.This is also known as accrual accounting.The matching principle holds that the expenses in the financial statement must be matched with the revenue.The value of the expense is included in the financial statements when the work product is sold, not necearily when the work or invoice is iued.Finally, the disclosure principle holds that information pertinent to make a reasonable judgment on the company's finances must be included, so long as the costs to obtain that information is reasonable.Four Basic Constraints
The four basic constraints in generally accepted accounting principles are: objectivity, materiality, consistency and prudence.The objective constraint states that all the information included in the financial statements must be supported by independent, verifiable evidence.When deciding what to include or exclude from the financial statements, the significance of the item must be considered under the materiality constraint.If this information would be significant to a reasonable third party, it must be included.The company is required to use the same accounting methods and principles each year under the consistency constraint and any variation must be reported in the financial statement notes.Under the constraint of prudence, accountants are required to choose a solution that reduces the likelihood of overstating aets and income.Each country has a financial accounting standards board, which works closely with the boards in other countries to resolve common problems in a systematic, coherent way.There are several international organizations encouraging the development of a single, international board to administer a greater level of uniformity in accounting standards around the world.
