Bookkeepers: G.A.A.P. explained simply (generally accepted accounting principles)
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- Опубликовано: 9 июл 2024
- Generally accepted accounting principles (GAAP) seem confusing, but in this video I break them down and let you know how they relate to your bookkeeping business. A lot of these GAAP you likely already know and understand (like, the fact that business finances should be reported separately from personal). If you've ever been confused about the complexities of these concepts, hopefully this video should help you bookkeepers!
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Did you ever feel confused when you heard about GAAP?
I love your effectiveness and humility in explaining these principles. I must have viewed a dozen of videos and I had to turn off some halfway. It was until yours that you pitched them with simplcity, clarity and they actually made sense to me. Thank you again. I look forward to watching your accrued method video. You rock!
Glad it was helpful! Thank you so much for your kind comment.
I haven't really thought about GAAP since college, thanks for the refresher!!!
Saying that we know more than we know..true! I have an interview for our accounting department and this is helping my past knowledge gel in my mind.
Thank you for this video!
So glad this helped :) -Gabe (FinePoints Admin)
Thank you finepoints, this was really , really easy to understand and put into practice. You put it in a layman english.
I was about to look up for some more info about GAAP and your video popped up. talk about perfect timing. Tks
Glad it was helpful!
@MorganIn, matching principle, that inventory is shown as asset until it’s get sale, when it’s get sale, shown as expenses in the same time period.
This video is saving my life for my accounting for managers class~!!! Thank you
Morgan is happy to hear that this video helped!!
Krista (FinePoints Admin)
Excellent - Thanks Very Helpful
Thank you! Mid-term tomorrow and I want to be sure I really understand these.
Hi Selina! Hope your mid-term went well!
Krista (FinePoints Assistant)
Thank you for the video!❤️ I have a question.
Is there any certification based on that I can show that I have a good knowledge of GAAP?
I'm late to catching this video, but I've been doing a lot of research toward a bookkeeping certification, and I have some examples of how the matching principle applies. One example is prepaid expenses like maybe insurance on a property or a vehicle. Rather than record the entire expense for the insurance in the first accounting period, you spread it out over its lifetime, releasing the expense piecemeal to your income statement. Another example is when selling goods: when you record revenue you need to record the reduction in inventory, that reduction then hits your "cost of goods sold" account which is an expense, within the same accounting period. And a third example is depreciation: when you purchase a fixed (non-current) asset like manufacturing equipment, you don't want to incur the entire expense in the first accounting period, but spread out over the asset's useful life, so you depreciate over time and release the depreciation as an expense to your income statement.
Thanks for sharing!
Krista (FinePoints Admin)
Thank you for your videos now I can undertand better.
Thanks for watching!
Krista (FinePoints Admin)
Please make more videos like this🙏
Matching principle works for artists and teachers - purchasing tools, materials, etc. that will be used for an upcoming or future project, but are not necessarily an expense until that project commences. Or at least that's the way I have understood it.
The matching expenses would be prepaid expenses like insurance or rent. If a client pays a year in advance on Nov 1st, a journal entry is needed on Dec 31st to show that only 2 months of that transaction has been used.
Matching Principles might be for a service shop for example, that the parts are purchased as stock but not towards revenue until their installed in the car and the R/O is closed out.
Are the generally accepted accounting principles published by any central authority for the accounting profession? Does each states board of accountancy have its own definition of what constitute generally accepted accounting principles? Are these principles simply a matter of long-standing practice and for lack of a better term, tradition?
yeah its not a cost until you can tie how much you used to produce something to sell, we did this and its because its wip at this stage, and so what is not used on a product to sell is still stuck in inventory, only put down costs it took per unit to sell, the rest not used is in inventory as WIP. or else said number of items at a certain time sold would have a humongous costs of all inventory bought tied to it.
I would like a video on accrual vs cash please. After watching this, I am unsure I understand now.
You got it!
Same here. Please make a video on accrual vs cash.
To put it simply, you are including money owed to you and money you owe. For example you sell someone something and invoice them. You would recognize a revenue (credit) and add to your accounts receivable (debit). The buyer would recognize the item received (debit an asset) and the amount due goes into accounts payable (credit).
Yes please create video
Hi, above principles as per US GAAP?
had to watch this for a sec time got lost in the eyes for the first time watching it ahahahahahaha now i understand it well thanksss
Thank you for audio. I want to start a bookkeeping business but I don't know how to get started. Can you please help me! I have a degree in accounting, an MBA in Finance from Sierra Leone, West Africa and looking forward to be a CPA license holder.
You gotta create your business, start marketing, and just do it!
Hi, is it feasible to work on MacBook while doing bookkeeping tasks ? I am askin because most of the accounting work requires use of MS excel and it is bit difficult to use MS excel on MacBook due to different keyboard set ups
Yes, you can absolutely use MacBook. Do you have a Google account? You can use the Google version of Excel, and it's great because you can take it anywhere you go! -Gabe (FinePoints Admin)
@@FinePointsBookkeeping yes, i have Google account
Please share a video regarding accrual method vs cash basic
Hi David! Check out this video that Morgan made on cash vs accrual (ruclips.net/video/Ssnjs9UiZ2Q/видео.html). Hope this helps!
Krista (FinePoints Admin)
Hi Ms. Morgan, I wonder if you're looking for a trainee to help you with your bookkeeping business for free in exchange for experience as an online bookkeeper for US accounts. Thanks in advance.
Thank you for reaching out to ask about working with Morgan. At this time Morgan is not looking to bring on additional help, but what a great idea to try and find a bookkeeper you could train with to gain experience! -Gabe (FinePoints Admin)
are these the same rules GAAP? im really confused about their names
1. Principle of Regularity: GAAP-compliant accountants strictly adhere to established rules and regulations.
2. Principle of Consistency: Consistent standards are applied throughout the financial reporting process.
3. Principle of Sincerity: GAAP-compliant accountants are committed to accuracy and impartiality.
4. Principle of Permanence of Methods: Consistent procedures are used in the preparation of all financial reports.
5. Principle of Non-Compensation: All aspects of an organization's performance, whether positive or negative, are fully reported with no prospect of debt compensation.
6. Principle of Prudence: Speculation does not influence the reporting of financial data.
7. Principle of Continuity: Asset valuations assume the organization's operations will continue.
8. Principle of Periodicity: Reporting of revenues is divided by standard accounting periods, such as fiscal quarters or fiscal years.
9. Principle of Materiality: Financial reports fully disclose the organization's monetary situation.
10. Principle of Utmost Good Faith
i think what's in the video pertains to IFRS standards? While what you enumerated is for US GAAP.
Pardon, but could you please share at least your first name and a summary of your training and experience? Thank you.
more of speaking rather than presentation.