Generally Accepted Accounting Principles (“GAAP”) Print

Partnerships are required to calculate their profits using GAAP. The value of work in progress must be accounted for at the lower of cost, or net realisable value. For these purposes “cost” will include the cost of direct labour, and attributable overheads, and the following items of expenditure should be brought into account:

  • Professional staff salaries
  • Support staff – where relevant
  • Staff expenses

The following items of expenditure may be excluded:

  • Advertising and marketing
  • Training
  • Financial expenses and computers

For medium sized firms and larger practices consideration should be given to bringing in a proportion of the following expenses:

  • Office expenses and overheads
  • Payroll/personnel
  • Administration
  • Premises

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