Just like a language has certain rules of grammar, certain principles are used in the language of accounting to understand it better.
To ensure uniformity in accounting, certain accounting principles, concepts or conventions are used while writing accounts and preparing financial statements. The terms - principle, concept, convention, doctrine, postulate and assumption are sometimes used interchangeably. These accounting principles provide a theoretical and logical base to accounting. They are based on logic and thus to avoid divergent practices in writing accounts and in preparing financial statements, accountants accept these principles or concepts which are framed after deliberations amongst experts of the subject. As these principles are widely accepted and applied by accountants, they are also known as "Generally Accepted Accounting Principles" or GAAPs.
In this course:
+ Accounting Principles, Concepts, and Conventions
+ Illustrations - Exercise