GENERALLY ACCEPTED ACCOUNTING PRINCIPLES Definition

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GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP) is a recognized common set of accounting principles, standards, and procedures. GAAP is a combination of accepted methods of doing accounting and policy board set authoritative standards.

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CASH DEFICIT, in accounting, is a shortage of available funds to satisfy current obligations.

EARNINGS PER SHARE (EPS) is either: a. Basic EPS is earnings before extraordinary gains and losses, less preferred-share dividends, divided by all common shares outstanding at the most recent fiscal year end. Net income, or earnings, refers to the companys after-tax profits before extraordinary gains or extraordinary losses for the most recent annual period; or, b. Diluted EPS is where the number of shares used in the calculation is increased to account for outstanding dilution such as options, warrants, in-the-money convertibles, etc. EPS, within a firm that has a sustainable competitive advantage, Should show a minimum of 5-years of their EPS trending strongly upward with consistency and without being erratic.

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