The set of rules that govern the field of accounting is known as accounting principles. Accounting principles are conventions that provide a framework for accounting, bookkeeping and financial reporting. These principles are essential for companies preparing their financial statements. For reporting purposes, both internal and external, accounting principles ensure that financial information should not be misleading to its users. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get the original essay During the Great Depression of 1929, the United States government passed legislation to create conventions, principles, and standards for accounting practices. These principles are known as generally accepted accounting principles, or GAAP. GAAP has helped standardize the practices used in the accounting industry for the preparation of financial statements. With the help of GAAP debtors, creditors and investors can analyze the financial health of the company and also compare its performance with other companies. All companies are expected to follow these generally accepted accounting principles when preparing their financial statements. The topics covered by GAAP are assets, liabilities, revenues, expenses, shareholders' equity, preparation of financial statements and all other industry-specific accounting practices relating to aviation, banking, etc. There are three accounting principles. These are: Keep in mind: This is just a sample. Get a personalized article from our expert writers now. Get a Custom Essay The Concept of Business Entity – In accounting, a clear distinction has been made between the business and its owner. The concept of a business entity means that the business should be treated as a separate entity from its owner. A business is a separate entity in the eyes of the laws. In legal terms, it can be said that a business can exist even after the existence of its owners. Even in the books of accounts of the business entity, every transaction is recorded from the perspective of the business and not from the perspective of the owner. Concept of going concern – The concept of going concern explains that the business, until it goes into liquidation, should be considered to have a perpetual or indefinite life. The American Institute of Certified Public Accountants defines it as “The concept of 'going concern' assumes that the business will exist long enough for all of the company's assets to be fully utilized. Using assets means taking full advantage of their earning potential.” Any business is said to be in going concern when there is neither the intention nor the need to end its activities in the foreseeable future. Concept of Full Disclosure – The concept of full disclosure requires companies to disclose all aspects of their accounting in their financial statements. According to this concept, financial statements must provide fair and complete information about what they purport to represent. To meet the requirements of the concept of full disclosure, the financial statements are supported by footnotes. For example, the market value of investments, methods used to value investments, inventories and methods used to charge depreciation of fixed assets, etc. are presented in the balance sheet in the form of footnotes. The purpose of the concept of full disclosure is to provide its users with all important and relevant facts..