GAAP principles have been developed by the accounting profession over the years to provide a consistent system of financial reporting in a constantly changing environment”

Go through any annual report of a company and evaluate how the companies are applying these GAAP principles (example:- Cost, Double Entry, Stable Monetary, Cash or Accrual, Accounting Period, Conservatism, Business Entity Concept etc.) in preparing their financial statement.

From this annual report I want to find how the company used the principles of accounting in preparing their financial statement.
 
By going through the financial statement I know how they used different kind of principles in different circumstances. This concept will help me a lot in future. As I became familiar with these principles, so I can use these kinds of principles in the financial statement for any company later. Even in future if I start a business then I can apply these principles for the financial statement of my company also.

For doing this job I follow the annual report of Bangladesh Lamps Limited (PHILIPS).

The primary purpose of GAAP is to help accountants provide relevant and comparable information. In other words, financial accounting practices should produce information that is relevant to the decision made by financial statement users. GAAP identify uniform practices that make financial statements more understandable and useful.
  
“The ground rules used by business entities in presenting financial information are called generally accepted accounting principles (GAAP).”  Jack L. Smith.

These principles have been developed by the accounting profession over the years to provide a consistent system of financial reporting in a constantly changing business environment. From the earliest days of accounting up through the first third of the 20th century, GAAP were developed through common usage.


The principles that are used in the following financial reports are as follows:

1.  Business entity concept
2.  Periodicity concept
3.  Going concern concept
4.  Cost principles
5.  Accrual concept
6.  Cash concept
7.  Conservatism concept
8.  Consistency concept
9.  Double entry concept
10. Objectivity principle
11. Stable dollar concept
12. Matching concept