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The Economic Entity Assumption principle separates the transactions of the business from those of its owners or other businesses. This ensures financial statements reflect the business’s financial status independently. Example: Personal expenses of a business owner are not recorded in the company's accounting records.

Under the Revenue Recognition Principle, revenue is recognized by businesses when it is earned, regardless of when the cash is received. Example: A law firm may record revenue once the service is performed, not necessarily when it receives payment from the client.

The Matching Principle requires businesses to match expenses with related revenues in the period in which the revenue was earned to determine the company's profit for that period. Example: Sales commissions paid out should be recorded in the same period as the revenue from the sales they relate to.

The Materiality Principle allows accountants to ignore GAAP rules when the dollar amount is insignificant to financial statements, hence not impacting users' decision making. Example: A pencil bought for office use may be expensed immediately, rather than being depreciated over its useful life.