PSC Exam Question - What are the Generally Acceptable Accounting Principles? What are it's Principle, Rules and Methods? Explain

Introduction - Generally Acceptable Accounting Principle

GAAP depends on three vital arrangements of tenets: the essential bookkeeping standards and rules, the by and large acknowledged industry hones, and the itemized guidelines and measures that have been issued by the Financial Accounting Standards Board (FASB) and the Accounting Principles Board (APB). GAAP (sound accounting guidelines) is a gathering of generally took after bookkeeping tenets and principles for money related announcing. GAAP particulars incorporate meanings of ideas and standards, and additionally industry-particular tenets.

Guidelines for aborting financial accounting in account of financial transactions are debit and rule rules and methods of credit. Debit and credit are done in the following manner.

A) based on account

1) Personal account

• The person who receives it is debit.
• The person who has a credit.

2) real account

• What it comes to is debit.
• It goes to the credit.

3) Signal Account

• It costs a devotee to spend or damage.
• If there is a income or a profit, it will be credited.

B) Based on property and liability

1) debit

• Debit is done at the following stage:
• Increase expenses
• To increase property
• The income decreases
• Liability decreased

2) Credit

• The following is credited to:
• Expenses
• The property decreases
• Income increase
• Liability increases

Or

• Debit: In case of expense of expense, income is reduced.
• Credits: Expenditure to the expense, increase in liability liability.