The ultimate goal of GAAP is to ensure that an organization’s financial statements are complete and accurate. Principle of utmost good faith: All individuals involved in the accounting process are assumed to be acting honestly and truthfully.Principle of materiality: The organization fully and truthfully discloses its monetary situation in financial reports, valuing assets at cost.Principle of periodicity: The organization follows a regular and routine schedule for accounting periods, such as fiscal quarters or fiscal years.Principle of continuity: Assets’ valuations are based on the assumption that the organization will continue to stay in business.Principle of prudence: All accounting entries are timely and realistic, not influenced by speculation.Principle of non-compensation: All aspects of the organization’s financial performance, both positive and negative, are reported with no expectation of debt compensation.Principle of permanence of methods: The organization’s accounting practices remain constant from one financial period to the next.Principle of sincerity: The organization’s accounting captures the financial information accurately and correctly.Principle of consistency: The organization’s accounting practices remain consistent and comparable every reporting period.
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