ACCOUNTING PRINCIPLES
When we look at a dictionary to know what is meant by principles, we’ll encounter words like doctrines, beliefs, dogmas, philosophies, creeds and similar words.
In Accounting, there is the so-called Generally Accepted Accounting Principles or GAAP. These GAAPs are the doctrines, creeds, dogmas we apply and follow in the accounting practice.
The GAAP guides the bookkeepers and accountants in the recording, measuring and reporting the transactions, events and activities of the organization.
Accounting data are recorded and measured, and Financial Statements are presented fairly in accordance with GAAP. That’s why auditors when expressing an opinion, they state “to fairly present the financial statements … in conformity with generally accepted accounting principles.”
GAAP are developed and continues to evolve thru experiences, occurrences or happenings in the business world, and careful study and research of those in the accounting profession especially by authoritative bodies. Its development and evolution are influenced by changes in economic conditions, business practices, needs of the users of the accounting information, and many more.
The GAAP in the Philippines are embodied in our Philippine Accounting Standards (PAS) and Philippine Financial Reporting Standards (PFRS). The authoritative body which oversees GAAP in the Philippines is the FRSC. They adopted the PAS and PFRS from the IASs and IFRSs of IASB.
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