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Entity Concept
A business is a separate legal entity from its owners. Financial activities of the business must be recorded separately from personal transactions.
Going Concern Concept
Assumes that a business will continue operating indefinitely, without plans to liquidate. This affects how assets and liabilities are reported.
Time Period
Divides the business's life into time intervals (months, quarters, years) for regular financial reporting, facilitating performance evaluation over time.
Monetary Concept
All financial transactions are recorded in a stable currency, providing a consistent measure for evaluating economic activity.
Accrual Concept
Revenues and expenses are recognized when earned or incurred, regardless of when cash is exchanged, giving a more accurate view of financial performance.
Consistency Concept
Requires businesses to use the same accounting methods over time, allowing for accurate comparisons and reliable financial reporting.
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