It is important that people should follow standard principles while doing accounting calculations. The principle should be such that it is followed through out the world. To honor this fact GAAP (Generally Accepted Accounting Principles) has been originated.

GAAP refers to the standard framework of guidelines for mainly financial accounting. It includes all the essential standards, conventions, rules and regulations that the account expert must follow while dealing with financial transactions.

GAAP implies various principles like principle of regularity, principle of consistency, principle of sincerity, principle of performance of methods, principle of non-compensation, principle of prudence, principle of continuity, principle of periodicity, principle of full disclosure.

All these principles are used in determining the various financial accounting procedures and thereby managing the accounting related data.