Accounting Transactions and Principles

Journal Entry System: A method to record accounting transactions by making entries in a journal.

Economic Entity Assumption: Separate financial identities for business and its owners. Company's activities must be distinct from owner's activities.
Monetary Unit Assumption: Transactions must be recorded in money terms. If not measurable, they cannot be included in financial statements.
Going Concern Assumption: Assumes that the business will continue to operate indefinitely, affecting how assets and liabilities are recorded.
Time Period Assumption: Allows for financial statements to be divided into specific periods for reporting purposes.

Full Disclosure Principle: All information that could influence decision-making must be disclosed in the financial statements.
Measurement Principle: Assets and liabilities can be measured using either:
- Historical Cost Principle: Based on the original acquisition cost.
- Fair Value Principle: Reflects current market value.
Recognition Principle: Revenues and expenses must be recognized when earned or incurred, respectively.
- Revenue is recognized when the performance obligation is satisfied.