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Business Entity
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Money Measurement
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Dual Aspect
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Financial affairs of the business should be completely separate from those of the owner
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Financial Records should be expressed in monetary terms.
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Every transaction has 2 effects on the business's accounts.
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Going Concern Concept
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Consistency Concept
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Prudence Concept
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Accruals or Matching Concept
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Assumes that a business will carry on tradinf for the foreseeable future.
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States that the accounts of a business should be prepared on the same basis every year.
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States that accountants should be cautious when reporting the financial position of a business. revenue and profit should not be recorded unless it is certain; anticipate all possible losses and record them as soon as they are known; choose the lowest value when faced with a choice of asset values or revenue; highest value when referring to costs
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Accruals: revenue whould be recorded when it is earned and not hen the money is received. (same goes to costs). Matching: states that when calculating profit, revenue should be matched against expenditure incurred in earning it.
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Objectivity
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Historical Cost
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Realization
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Materiality
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Accounts should be based on verifiable evidence rather than personal opinion
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Accounting should be based on the original costs incurred in the transaction
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Revenue shouldn't be recognized until the exchange of goods or services has taken place.
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Accountants should avoid wasting time trying to accurately record items of expenditure which are trivial.
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