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Accounting Principle
The generally accepted rules that govern the way accounting info is generated.
Term | Definition |
---|---|
ENTITY | The business is assumed to be separate from the owner and other businesses, and its records should be kept on this basis. |
GOING CONCERN | The life of the business is assumed to be continuous, and its records are kept on that basis. |
REPORTING PERIOD | The life of the business must be divided into periods of time to allow reports to be prepared; these accounting reports should reflect the Reporting period in which a transaction occurs. |
HISTORICAL COST | The recording of a transaction at its original cost or value, as this value is verifiable by reference to the source document. |
CONSERVATISM | Losses should be recorded when probable but gains should only be recorded when certain, so that liabilities and expenses are not understated and assets and revenues are not overstated. |
CONSISTENCY | Accounting methods shoud be applied in a consistent manner to ensure that reports are comparable between periods. |
MONETARY UNIT | All items must be recorded and reported in a common unit of measurement; that is, Australian dollars. |