Notes on chapter 1:

Financial statements:



GAAPs:

Business Entity:

The assets of a business & its owner must be kept seperate.

Cost Principle:

Asset values on the BS are always recorded @ cost.

Going Concern:

The business is assumed to be a continuing enterprise.

Objectivity Principle:

Asset valuations must be factual & independently verifiable.

Comparability:

All financial statements must present similar info in similar format based on ground rules.

Reliability:

All recorded info must be based on past events.

Disclosure:

Any financial facts necessary for the proper interpretation of financial statements must be disclosed.