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Generally Accepted Accounting Principles (GAAP) requires that the financial Statements of company should include all of those Steps in the Accounting Cycle which are necessary for the fair representation of financial statements of the company businesses.  These steps are I ncome Statement or Statement of Comprehensive Income, Balance Sheet or Statement of Financial Position, Statement of Changes in Equity and Notes to the Accounts or Footnotes. For Fair Representation of Financial Statements and to provide true and fair view of these statements to users of financial statements, qualitative Characteristics of Financial Statements is must. Following are the Most Important Quality Factors of these Statements: Ø Relevancy Financial Statements whence published are provided to different users. These users may include: Employees, Government, Shareholders or Owners of an entrepreneur, Suppliers, Customers, Financial Institutions, Investors, and

Here we discuss about Business Entity Concept that is one of the Accounting Concepts and it is included in the Generally Accepted Accounting Principles (GAAP). Under this concept, the business must be regarded as Separate Legal Entity and it is separated from its owners. All the Business Transactions are recorded from the point view of business and not from the point view of owners. All the perso nal transactions of the owners of the business must be separated from the business. For example, if a sole owner invest Rs. 300000 in the business, then this amount invested is a Capital Account recorded in the book of company's business bu t if the ow ner withdraws Rs. 10000 for his personal use, then it has not concerned with the business and it ( Drawings ) is deducted from the capital of the business. Personal transactions of the Sole Owner or Proprietor