accounting: principles

consistency

requires businesses to apply the same methods and practices at all times

historical cost

all transactions should be recorded at the original price when bought

materiality

businesses should record only transactions that matter for decisions, distinguishing between assets and expenses

realisation

revenue is only recorded when earned, such as after selling goods or services

matching

requires that expenses be matched with the revenues they generate

duality

every transaction has two sides — a debit and a matching credit

money measurement

records only transactions that can be measured in money, ignoring non-financial factors

business entity

transactions of the owner must be recorded separately from the transactions of the business

prudence

assets and income shouldn’t be overstated; liabilities or expenses shouldn’t be understated

going concern

a business will continue to operate indefinitely, with no intention of closing down