Introduction to Accounting principles

Introduction.

Financial statements are to be prepared in accordance with generally accepted accounting
principles. This is because if each organisation was to adopt its own principles in the
maintenance of accounting records and the publishing of accounting information it will lead
to a welter of confusion. Such financial statements will have low acceptability as it will be
difficult to understand them without first knowing the principles underlying the preparation
of such statements. Also financial statements prepared without the generally accepted
accounting principles as their base will be unsuitable for inter-period and inter-firm comparison.
It is for this reason that when accounts are audited by the auditors, they see to it that the
financial statements are prepared in accordance with generally accepted accounting principles
and they also certify that the statements have been prepared in accordance with generally
accepted accounting principles.