ACCOUNTINGPRINCIPLES
Economic Entity Assumption
Distinction between the individual and enterprise level, as a business report should only be related to the company's operations.
Cost principle
Amount at which an asset is purchased and is recorded in the balance sheet as the actual price of payment withou market adjustments.
Full Disclosure Principle
Notes and insights on every detail of a Company's information to not affect investment decisions of investors.
Going Concern Assumption
It is assumed that an enterprise is a process without an end date.
Matching Principle
Also known as the Expense Recognition, as the expense recorded must match the revenue earned in the same time period.
Revenue Recognition Principle
The revenue and cost should be recorded at the moment it occurs and not when the money is received.
Conservatism
Always provide for expenses and losses but not anticipate profits.
Monetary Unit Assumption
Transaction recorded and measure in the same unit or currency.
Time Period Assumption
All the financial statements have a start and an end date, but it covers a period of time to make comparisons and evaluations.
10
Materiality
Only material information should be disclosed.
Accounting exist to privide the service of identifying, measuring and classifying economic and financial information to register transactions on record and its main purpose is to facilitate the decision-making process within a company, helping to make judgments, and to discover both opportunities and detrimental effects in order to become more reliable. It is considered a basic tool in every company to take control over finances.
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ACCOUNTING PRINCIPLES
CINTA MONTELONGO MELANIE AYLIN
Created on February 15, 2021
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Transcript
ACCOUNTINGPRINCIPLES
Economic Entity Assumption
Distinction between the individual and enterprise level, as a business report should only be related to the company's operations.
Cost principle
Amount at which an asset is purchased and is recorded in the balance sheet as the actual price of payment withou market adjustments.
Full Disclosure Principle
Notes and insights on every detail of a Company's information to not affect investment decisions of investors.
Going Concern Assumption
It is assumed that an enterprise is a process without an end date.
Matching Principle
Also known as the Expense Recognition, as the expense recorded must match the revenue earned in the same time period.
Revenue Recognition Principle
The revenue and cost should be recorded at the moment it occurs and not when the money is received.
Conservatism
Always provide for expenses and losses but not anticipate profits.
Monetary Unit Assumption
Transaction recorded and measure in the same unit or currency.
Time Period Assumption
All the financial statements have a start and an end date, but it covers a period of time to make comparisons and evaluations.
10
Materiality
Only material information should be disclosed.
Accounting exist to privide the service of identifying, measuring and classifying economic and financial information to register transactions on record and its main purpose is to facilitate the decision-making process within a company, helping to make judgments, and to discover both opportunities and detrimental effects in order to become more reliable. It is considered a basic tool in every company to take control over finances.
Sources on Icon