These changes must be explained and justified.
This principle states that accountants must apply the same standards throughout the reporting process and not change it without prior notice. The first principle states that GAAP must be followed strictly and regularly as a standard accounting practice in a business. These ten principles separate an organization's business dealings from its owners' private transactions, standardize the monetary units used in reports, and expressly state the periods covered by specific reports. It includes ten accounting principles that eliminate deceptive accounting and financial reporting techniques.
The US government believed that one of the causes of the Stock Market Crash of 1929 and the following Great Depression was the poor accounting practices of some publicly traded companies. It is only mandatory for publicly traded companies in the United States of America. GAAP stands for Generally Accepted Accounting Principles.
Generally Accepted Accounting Principles are a well-recognized set of rules, standards, and procedures for financial reporting.