The set of rules that regulate the field of accounting are known as accounting principles. Accounting standards are conventions that provide a framework for accounting, bookkeeping and financial reporting. These principles are essential for companies preparing their own financial statements. For reporting purposes, both internal and external, accounting standards ensure that financial information is not misleading to its users. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an Original Essay During the Great Depression of 1929, the United States government passed a law creating 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 preparing 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 that of 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, revenue, expenses, net worth, preparation of financial statements and all other industry-specific accounting practices related to aviation, banking, etc. There are three accounting principles. These are: Please note: This is just an example. Get a custom paper 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 law. In legal terms it can be said that a company can exist even after the existence of its owners. Even in the books of business entities, every transaction is recorded from the company's point of view and not from the owner's point of view. Going concern concept – The going concern concept explains that the company until and unless it has entered into liquidation, must be considered to be in perpetual or indefinite life. The American Institute of Certified Public Accountants defines it as “the concept of going concern assumes that the business remains in existence long enough for full utilization of all of the company's resources. The assets used mean getting the maximum benefit from their earning potential.” Any company is said to be in business when there is neither intention nor need to close down its operations in the near future. Full Disclosure Concept – The full disclosure concept requires companies to disclose every aspect of their accounting in their financial statements. According to this concept, financial statements should provide correct and complete information on what they are intended 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, the methods used for valuing investments, inventories and the methods used to charge depreciation on fixed assets, etc. they are indicated in the balance sheet as footnotes. The purpose of the full disclosure concept is to provide its users with all material and relevant facts regarding health and financial outcomes.