ACCOUNTING PRINCPLES AND CONCEPTS

FLASHCARDS

• Accruals / Matching Principle: Revenue and costs are recognized in the period to which they relate, not when cash is received or paid.

• Prudence Principle: Ensure financial statements exercise caution so that assets and income are not overstated, and liabilities and expenses are not understated.

• Going Concern Principle: The assumption that the business will continue operating in operational existence for the foreseeable future.

• Consistency Principle: Accounting treatment of like items must be applied uniformly from one accounting period to the next to allow meaningful comparison.

• Business Entity Principle: The financial transactions of the business must be kept strictly separate from the personal financial affairs of its owner(s).

• Historical Cost Principle: Assets and transactions are recorded at their actual original purchase cost.

• Materiality Principle: Items of small monetary value that do not materially affect user decisions can be simplified in treatment (e.g., charging office stationery directly to expenses).

• Dual Aspect Principle: Every financial transaction has two equal and opposite effects (a debit and a credit).

• Money Measurement Principle: Only information and transactions that can be expressed in monetary terms are recorded in the accounting records.

• Accruals / Matching Principle: Revenue and costs are recognized in the period to which they relate, not when cash is received or paid.

• Prudence Principle: Ensure financial statements exercise caution so that assets and income are not overstated, and liabilities and expenses are not understated.

• Going Concern Principle: The assumption that the business will continue operating in operational existence for the foreseeable future.

• Consistency Principle: Accounting treatment of like items must be applied uniformly from one accounting period to the next to allow meaningful comparison.

• Business Entity Principle: The financial transactions of the business must be kept strictly separate from the personal financial affairs of its owner(s).

• Historical Cost Principle: Assets and transactions are recorded at their actual original purchase cost.

• Materiality Principle: Items of small monetary value that do not materially affect user decisions can be simplified in treatment (e.g., charging office stationery directly to expenses).

• Dual Aspect Principle: Every financial transaction has two equal and opposite effects (a debit and a credit).

• Money Measurement Principle: Only information and transactions that can be expressed in monetary terms are recorded in the accounting records.

• Accruals / Matching Principle: Revenue and costs are recognized in the period to which they relate, not when cash is received or paid.

• Prudence Principle: Ensure financial statements exercise caution so that assets and income are not overstated, and liabilities and expenses are not understated.

• Going Concern Principle: The assumption that the business will continue operating in operational existence for the foreseeable future.

• Consistency Principle: Accounting treatment of like items must be applied uniformly from one accounting period to the next to allow meaningful comparison.

• Business Entity Principle: The financial transactions of the business must be kept strictly separate from the personal financial affairs of its owner(s).

• Historical Cost Principle: Assets and transactions are recorded at their actual original purchase cost.

• Materiality Principle: Items of small monetary value that do not materially affect user decisions can be simplified in treatment (e.g., charging office stationery directly to expenses).

• Dual Aspect Principle: Every financial transaction has two equal and opposite effects (a debit and a credit).

• Money Measurement Principle: Only information and transactions that can be expressed in monetary terms are recorded in the accounting records.

• Accruals / Matching Principle: Revenue and costs are recognized in the period to which they relate, not when cash is received or paid.

• Prudence Principle: Ensure financial statements exercise caution so that assets and income are not overstated, and liabilities and expenses are not understated.

• Going Concern Principle: The assumption that the business will continue operating in operational existence for the foreseeable future.

• Consistency Principle: Accounting treatment of like items must be applied uniformly from one accounting period to the next to allow meaningful comparison.

• Business Entity Principle: The financial transactions of the business must be kept strictly separate from the personal financial affairs of its owner(s).

• Historical Cost Principle: Assets and transactions are recorded at their actual original purchase cost.

• Materiality Principle: Items of small monetary value that do not materially affect user decisions can be simplified in treatment (e.g., charging office stationery directly to expenses).

• Dual Aspect Principle: Every financial transaction has two equal and opposite effects (a debit and a credit).

• Money Measurement Principle: Only information and transactions that can be expressed in monetary terms are recorded in the accounting records.