Accoutning

Going Concern

The assumption that the business will continue to operate indefinitely into the future and will not be wound up in the short term. This justifies the classification of assets and liabilities into current and non-current.

accrual basis

The assumption that revenues are recognised when earned and expenses are recognised when incurred, regardless of when cash is received or paid. This allows for the calculation of profit for a period.

period

The assumption that the life of the business is divided into regular intervals of time to allow for the reporting of financial performance and position.

Entity

The assumption that the business is considered a separate entity from its owner(s) and from other businesses. All transactions are recorded from the business's point of view.

relevance

Financial information is relevant if it is capable of making a difference to the decisions made by users. It has predictive value (helps forecast future outcomes) and/or confirmatory value (confirms or changes past evaluations).

faithful representation

Financial information that is an accurate depiction of the economic event it represents. This means it is free from material error, bias and complete

comparability

Financial information is comparable if users can identify and understand similarities and differences among items across different entities or different reporting periods for the same entity.

verifiability

this characteristic assures users that information represents faithfully the economic phenomena it purports to represent. It means that different knowledgeable and independent observers could reach a consensus that a particular depiction is a faithful representation.

timeliness

Financial information is timely if it is available to decision-makers in time to be capable of influencing their decisions.

Understandability

Financial information is understandable if it is presented clearly and concisely, making it comprehensible to users who have a reasonable knowledge of business and economic activities.