Basic accounting theory provides the rules governing the process for
recording financial information about a business. "At the heart of
modern accountancy is the double-entry book-keeping system. This
system involves making at least two entries for every transaction: a
debit in one account, and a corresponding credit in another account.
The sum of all debits should always equal the sum of all credits. This
provides an easy way to check for errors."
"Accountancy" Wikipedia (July 24, 2005) http://www.wikipedia.org/wiki/Accounting
In the United States, these rules are called Generally Accepted
Accounting Principles (GAAP). Although they are not laws, the
Securities and Exchange Commission requires public companies to follow
them. The Financial Accounting Standards Board is the most important
organization in setting Generally Accepted Accounting Principles.
Although not part of GAAP, Statements of Financial Accounting Concepts
provide the basis for Statements of Financial Accountant Standards,
which are the most important GAAP-establishing publications.
The seven Statements of Financial Accounting Concepts provide the
underlying basic accounting theory for GAAP. These are described in
the following articles:
"US generally accepted accounting principles" Wikipedia (July 19,
2005) http://en.wikipedia.org/wiki/UK_generally_accepted_accounting_principles
"Chapter 2-The Conceptual Framework"
http://www.olemiss.edu/courses/accy303/Chapt2.pdf
Sincerely,
Wonko
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