Accounting is the language of the world of finance and taxation.
As with all languages, there are certain rules and conventions that
we follow to make the language universally understandable and
acceptable. We refer to these rules as concepts and principles,
which also provide the foundation for calculations of taxable
income under the Income Tax Act
("Act"). In this Part, we commence with general
principles. In subsequent Parts, we will examine specific tax rules
of accounting.
When accounting rules become generally accepted by business and
the appropriate authorities, we refer to them an "generally
accepted accounting principles" (GAAPs), which are essentially
the rules within which accountants are supposed to operate. GAAPs
comprise assumptions, principles, standards, rules and conventions
for preparing and presenting financial statements. However, as with
all languages, there can be misinterpretations and distortions,
whether accidental or deliberate. Hence,
