Note an early definition of the term "principles" by the American Institute of Certified Public Accountants (AICPA, 1953, p. 9) as "a general law or rule adopted or professed as a guide to action; a settled ground or basis of conduct or practice." This means that principles are more general than rules and therefore do not prescribe exactly how each event occurring in an organisation should be recorded.
The obvious reason is that there are many issues, events, and matters in accounting practice that differ from one organisation to another. Since a single detailed set of rules could not conceivably apply to every organisation, good accounting practice in the U.S. developed initially into what came to be collectively described as "Generally Accepted Accounting Principles" or GAAP.
The core principles of U.S. GAAP were drafted by the Accounting Principles Board (APB) and, later, by the Committee on Accounting Research (CAR), two pre-war professional institutions established to set standards for the accounting profession. ...Show more