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Patterson Accounting Principles

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In relation to the problem of Patterson, GAAP are the accounting principles generally accepted and used by companies based in the US or listed on the stock exchanges in that country. They are a combination of standard approved by regulatory organizations and accepted ways of keeping records.
GAAP include a massive volume of standards, interpretations, opinions and bulletins and are developed by Financial Accounting Standard Board (FASB), the Accounting Profession (AICPA) and the securities and exchange commission (SEC). The GAAP is a combination of standard approved by regulatory organizations and accepted ways of keeping records. So the standard of GAAP is equivalent to IAS (International Accounting Standards). GAAP is very detailed and reflecting …show more content…

This requires that accountants enter financial information in the original costs associated with the transaction. An example of piece of machinery that had a cost of $ 2,000 but have a value of 4000 the accountant can not change the price to the original value because the company paid for the piece of machinery the half of the original value and in the book should indicate the $2000. Following the accounting rules, assets in the books of a society rarely reflect market values.
In the other hand, the revenue recognition principle is designed to prevent companies placing amounts of revenue in its financial records early. Companies can expect a huge sale that will take place soon, and they would like to include this income in your accounting system to increase its net income for the current period. This, however, does not follow accounting standards. Revenue should be recorded only once they were obtained. Receipt of a contract is not an operation of a company to record …show more content…

Anyone attempting to build a projection of how the company will operate in the future must have accurate information related to your past performance, such as cash flow, expenses and profits and lost statutes. By providing a standard GAAP it ensures that investors can inform investment decisions about the potential of the company. One of 11 main GAAP relates to the provision of full disclosure. This means that an accountant or bookkeeper should include all relevant information to the financial position of the company's financial status or, where possible, to provide more information

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