What are the basic accounting postulates?

              Financial statements are based on generally accepted
accounting principles—but developing and applying
these principles creates a variety of problems,
WHAT ARE THE BASIC
EVERY DAY CERTIFIED PUBLIC ACCOUNTANTS SIGN reports which
state flatly that the accompanying financial statements are "fairly
presented in accordance with generally accepted accounting princi­ples."
We CPA's have been making that representation for upwards of
25 years. During that time there must have been literally hundreds of
thousands, if not millions, of discussions and arguments with clients,
attorneys, bankers, investment bankers, other accountants, and gov­ernment
agencies as to whether a particular treatment was or was not
in accordance with generally accepted accounting principles.
During the same period, ideas as to what principles are, in fact,
"generally accepted" have changed. To cite but two examples: Pur­chased
good will is not now, as such, to be written off against capital
surplus, and LIFO has come to be an accepted method of stating
inventories.
The SEC partially faced up to this problem in 1938 by issuing its
2 THE QUARTERLY