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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 26, 2019

Included In Certifications

This course is included in the following Certification Programs:

14 CoursesProfessional Bookkeeping Certification

  1. Bookkeeping Basics - Critical Accounting Terminology and Effective Execution of Concepts
  2. Bookkeeping Basics – Processes and Debits and Credits
  3. Bookkeeping Basics – Accrual vs. Cash Accounting
  4. Bookkeeping Basics – Payroll and Expenses
  5. Bookkeeping Basics – Formation of a Legal Entity and Establishing a Chart of Accounts
  6. Bookkeeping Basics – Utilizing Journals, Subsidiary Ledgers and the General Ledger
  7. Bookkeeping Basics – The Essential Responsibilities of the Bookkeeper on a Daily, Weekly, Monthly and Annual Basis
  8. Bookkeeping Basics – Fixed Assets and Inventory
  9. Bookkeeping Basics – Accounts Payable/Disbursements and Accounts Receivable/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

9 Reviews (64 ratings)Reviews

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.
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
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
Covered GAAP very clearly and included a brief origin of GAAP. I would recommend to any Accountant or SOX Finance Auditor.
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
Anonymous Author
Great review of GAAP Principles, Assumptions and Considerations. Content is well organized.
5
Anonymous Author
Provides a throughout overview of GAAP and associated principles.
5
Member's Profile
Learning Objectives were discussed, requirements were met.

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 .
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