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This course focuses on the GAAP principles for proper preparation of financial statements. We highlight the concepts in ASC 205 regarding presentation of those financial statements.

Generally accepted accounting principles (GAAP) are a set of rules that encompass the details, complexities, and legalities of business and corporate accounting.  The Financial Accounting Standards Board (FASB) uses GAAP as the foundation for its comprehensive set of approved accounting methods and practices. 

Compliance with these GAAP principles is built on three rules that aim to eliminate misleading accounting and financial reporting practices. These rules create consistent accounting and reporting standards which provide prospective and existing investors with reliable methods of evaluating an organization’s financial standing. They include:

  • The basic accounting principles, assumptions and considerations. 
    • Assumptions are considered a statement that is presumed to be true without concrete evidence to support it.  
    • Considerations are areas that govern the accountant’s ability to make decisions.
    • Principles are the rules and guidelines that companies must follow when reporting financial data.  These principles include: cost, disclosure, going concern, matching, revenue recognition, professional judgment, and conservatism
  • Rules and standards issued by the FASB and its predecessor, the Accounting Principles Board (APB)
  • Generally accepted industry practices

Per GAAP, companies are responsible for providing reports on their cash flows, profit-making operations and overall financial conditions. There are three major financial statements required under GAAP: 

  • Income statement 
  • Balance sheet 
  • Cash flow statement

Presentation of the Financial Statements in accordance with GAAP is governed by Ac­count­ing Standards Cod­i­fi­ca­tion (ASC) Topic 205, Pre­sen­ta­tion of Fi­nan­cial State­ments. The Standard defines the following as a full set of financial statements:

  • Financial position at the end of the period
  • Earnings, which may be shown in a separate statement or within one continuous statement of comprehensive income
  • Comprehensive income for the period in one statement or two consecutive statements
  • Cash flows during the period
  • Investments by and distributions to the owners during the period.

 

Learning Objectives

  • Explore the history of generally accepted accounting principles (GAAP) and recognize why the accounting and GAAP principles are of strategic importance to the accounting profession.
  • Discover the GAAP assumptions, principles and considerations and their application.
  • Discover the GAAP rules and standards.
  • Discover how to apply GAAP principles, assumptions, and considerations to the financial statements.
Last updated/reviewed: November 5, 2020

Included In Certifications

This course is included in the following Certification Programs:

14 CoursesProfessional Bookkeeping Certification

  1. Bookkeeping: Terminology and Process Execution
  2. Bookkeeping: Debits And Credits
  3. Bookkeeping: Cash vs. Accrual
  4. Bookkeeping: Payroll And Expenses
  5. Bookkeeping: Legal Entity And Chart Of Accounts
  6. Bookkeeping: Journals, Subsidiary Ledgers and General Ledger
  7. Bookkeeping: Responsibilities
  8. Bookkeeping: Fixed assets and inventory
  9. Bookkeeping: Accounts Payable/Accounts Receivable And Receipts
  10. Management Internal Control Essentials
  11. GAAP Principles, Assumptions and Considerations
  12. GAAP Presentation of Financial Statements
  13. Bookkeeping Basics – Case Study Scenario
  14. Useful Bookkeeping Tools

18 CoursesFinancial Statement Preparation, Reporting and Auditing Certification

  1. Financial Statement Introduction
  2. GAAP Principles, Assumptions and Considerations
  3. GAAP Presentation of Financial Statements
  4. Management Discussion and Analysis (MD&A) Update
  5. Sarbanes Oxley (SOX) Overview
  6. Sarbanes-Oxley Section 302: ICFR
  7. XBRL (Extensible Business Reporting Language) Introduction to Basics - Updated
  8. XBRL - Connection to SOX 302/404 and Critical Roles
  9. Analyzing Financial Ratios - Solvency, Liquidity and Debt
  10. Analyzing Financial Ratios - Leverage
  11. Analyzing Financial Ratios - Performance And Efficiency
  12. Conducting An Audit In Accordance With GAAS - Part 1
  13. Conducting An Audit In Accordance With GAAS - Part 2
  14. Conducting An Audit In Accordance with GAAS - Part 3
  15. Introduction to Accounting for Income Taxes Based on Income
  16. Practical Application For Accounting For Income Taxes Based On Income Part 1
  17. Practical Application For Accounting For Income Taxes Based On Income Part 2
  18. FASB Codification Research System

41 Reviews (192 ratings)Reviews

5
Member's Profile
This was a very confusing one. I finally passed when I answered one question which seemed again what the material and I understood. It was question six. I disagree that it should be answer A. A going concern is considered when a company has issues about going a year from the opinion letter date.
5
Anonymous Author
In addition to the history of GAAP and some major expectations required of accountants, I learned from this course about GAAP assumptions, principles, considerations, and their applications to the balance sheet, income statement, cash flow statement, and shareholder's equity statement.
5
Anonymous Author
I appreciate the history and evolution of GAAP and how to differentiate between principles, assumptions and considerations...quite helpful! The time dedicated for each section was appropriate. Perhaps include example of the SCF and what an investor would be interested in seeing.
4
Anonymous Author
Course was very foundation and conceptual in nature. Good history sprinkled throghout kept my interest piqued during the video lectures. The slides have a lot of information in them so they are better to dig into when you want more info on a topic.
5
Member's Profile
Lynn this was very helpful to me in brushing up on GAAP. We are going from Compilation to Review and I needed to bone -up on GAAP. Thank you for a wonderful and comprehensive presenation. I am a big fan of your courses. Larry
3
Anonymous Author
I felt that the exam questions were very deceiving. I took very good notes and really paid attention to the course and it took me a lot longer than an hour and a half to complete. I felt very frustrated with this course.
4
Anonymous Author
Great review course if you current position / responsibilities do not involve these activities. Most large companies silo accounting from financial reporting, this course helps to connect those activities.
4
Anonymous Author
This course is a good summary of GAAP and its history. As with each of the courses that I have taken, it is very helpful that you can print the slides and add additional notes.
5
Anonymous Author
This was a great course for reviewing/gaining an understanding of GAAP principles and how to apply them to financial reporting. Highly recommend this course!
5
Member's Profile
The concept of GAAP was detailed and clearly explained the expectations Accountants in the reporting of Financial statement. FASB was well understood
5
Anonymous Author
Great course for beginners as well as a good refresher for established professionals. Instructor is knowledgeable and well organized in presentation.
5
Anonymous Author
This is a great course in providing a basic understanding on fundamental principles behind the preparation of financial statements under US GAAP.
5
Anonymous Author
Very enjoyable course. The instructor has a great deal of knowledge and presents the topics, as well as the associated examples clearly.
5
Anonymous Author
Good brief history and background of GAAP and the principles they created in order to combat what occurred during the Great Depression.
5
Member's Profile
Getting close to completing my certificate. This was tougher but very helpful. Looking forward to more explanation of the FS and BS.
5
Anonymous Author
This is great for a new accountant, it is not over-their-head. It is basic knowledge for someone who is not familiar with GAAP.
5
Anonymous Author
Covered GAAP very clearly and included a brief origin of GAAP. I would recommend to any Accountant or SOX Finance Auditor.
5
Anonymous Author
A very good refresher course for everyone in accounting profession. It covers basic GAAP principles, rules and standards.
5
Member's Profile
A quite informative and concise review course of the main GAAP principles. Everything is to the point and very useful.
5
Member's Profile
Some of the questions on the exam were not clearly covered in the materials, but all in all, this is a good course.
5
Anonymous Author
This was a little more difficult as it does not pertain to my current job, however it is valuable information.
4
Anonymous Author
Good overview. Best suited for beginners. Would benefit from more practical examples to support the theory.
5
Member's Profile
Good teacher, informative course. Test questions properly reviewed on the material. Objectives met.
3
Anonymous Author
A good reminder to the basic concepts and rules underlying our accounting guidance and principles
4
Anonymous Author
Instructor explains well, the slides are helpful. This is a very basic accounting theory class.
5
Anonymous Author
Great review of GAAP Principles, Assumptions and Considerations. Content is well organized.
5
Anonymous Author
Content covers the main topics of the course related to the GAAP principles and assumptions
3
Anonymous Author
This course covers the very basics of accounting. This does not dig into in-depth topcis
5
Member's Profile
This course was well structured and the instructor was easy to follow. Highly recommend.
4
Member's Profile
An excellent and comprehensive review of the history and details regarding GAAP.
5
Anonymous Author
Presents a great overview of GAAP in a clear and straight forward approach.
5
Anonymous Author
Thanks Lynn, I am quite satisfied with the info. You are the best.
5
Anonymous Author
Provides a throughout overview of GAAP and associated principles.
4
Anonymous Author
Very comprehensive summary, as usual, related to this instructor.
5
Member's Profile
Learning Objectives were discussed, requirements were met.
5
Anonymous Author
Good information. Your course materials are very helpful!
5
Member's Profile
For the most part, easy to understand and comprehensible
5
Member's Profile
Good overview of GAAP and presented in an effective way.
4
Anonymous Author
I thought the course was informative, and I enjoyed it.
4
Member's Profile
Great overview of GAAP and its history. Very helpful
5
Member's Profile
interesting course, very informative. great takeaways

Prerequisites

Course Complexity:

No advanced preparation or prerequisites are required for this course.

Education Provider Information

Company:
Illumeo, Inc., 75 East Santa Clara St., Suite 1215, San Jose, CA 95113
Contact:
For more information regarding this course, including complaint and cancellation policies, please contact our offices at (408) 400- 3993 or send an e-mail to .

3 QuestionsCourse Questions and Answers

User picture

The last question on the Final Exam is about information that was not covered in the course. The question reads: "Which of the following are NOT considered elements of other comprehensive income?" I knew the answer from Intermediate Accounting I, but this could be frustrating for others.

Also, the question on the Final Exam: "How is the concept of going concern related to the income statement? gives as a correct answer information that is not stated in the material. I will admit when you think about it, I understand why it is the correct answer.

Perhaps these were questions that caused the reviewer [Anonymous (Accountant)] to feel that "the exam questions were very deceiving."

Member's Profile

Thanks for your comments. I always take the questions from the material or terms. I will relook at these to see if there is an issue. Thanks for you input

Member's Profile

I found the problem and thank you again for pointing it out. Illumeo inadvertently used the final exam questions from the GAAP Financial statement course on this course. I will have them correct it. This should have been caught in their quality review.

Course Syllabus
INTRODUCTION AND OVERVIEW
  4:52Introduction to GAAP Principles, Assumptions and Considerations
  15:24GAAP History
  7:45Rules and Standards
  6:09GAAP Assumptions
  15:42GAAP Principles
  3:52Considerations
  5:56Balance Sheet Principle Analysis
  3:07Cash Flow Pinciple Analysis
  3:05Stockholders Equity Principle Analysis & Summary
CONTINUOUS PLAY
  1:05:52GAAP Principles, Assumptions and Considerations
Supporting Materials
  PDFSlides: GAAP Principles, Assumptions and Considerations
  PDFGAAP Principles, Assumptions and Considerations Glossary/Index
review and test
  quizREVIEW QUESTIONS
 examFINAL EXAM