Business Glossary

rules and guidelines of accounting. They determine such matters as the measurement of assets, the timing of revenue recognition, and the accrual of expenses. The "ground rules" for financial reporting are referred to as Generally Accepted Accounting Principles (GAAP). To be "generally accepted," an accounting principle must have "substantial authoritative support" such as by promulgation of a Financial Accounting Standards Board (FASB) pronouncement. Accounting principles are based on the important objectives of financial reporting. An example of an accounting principle is accrual.