accounting: principles

consistency (depreciation): requires businesses to apply the same methods and practices at all times, consistently

historical cost (NCA, aka non-current assets): all transactions should be recorded at the original price when bought

materiality (asset vs expense): businesses should record only transactions that matter for decisions, to distinguish between assets from expenses

realisation (inventory): revenue is only recorded when earned, like after selling goods or services, to keep accurate reports

matching (income & expense) PFDD, PFDepreciation: requires that expenses be matched with the revenues they generate

duality (dr & cr): every transaction has two sides— a debit and a matching credit— to keep the balance sheet balanced

money measurement (employee morale, goodwill, competitor pricing, reputation, location): records only transactions that can be measured in money, ignoring non-financial factors

business entity (capital or drawing): transactions of the owner must be recorded separately from the transactions of the business

prudence (PFDD, bad debts, PF DEP, inventory valuation): assets and income shouldn’t be overstated, and liabilities or expenses shouldn’t be understated

going concern: business will continue to operate indefinitely; no intention of closing down