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Accounting principels also known as conventions, doctrines or assoumptions, based on the preparation and presentations of finacial statements are very importants, also importants are knowing that this principels could be breached, how, and that it should be looked out for in preparing the financial statements.
Accounting principles enable correct accountability.
What is principles of accounting?
Accounting principles can also refer to fundamental accounting principles and the following are the fundamental accounting principles;Entity,Money-measurement,Going Concern,Time period,historical cost,Objectivity,Matching,Consistence,materiality,realization,conservatism etc. One of the principles, Going concern implies that financial statements do not represent a company's worth if its assets were to be liquidated,but rather that the assets will be used in operations .This concept also allows business to spread (amortize) the cost of an asset over its expected useful life .
What are the fundamental principles of accounting ?
The recognition of how the principles are breached may give a guideline to the owners not to breach.
Principles of Accounting was often the title of the introductory course in accounting. It was also common for the textbook used in the course to be entitled Principles of Accounting. 2.Principles of accounting can also refer to the basic or fundamental accounting principles: cost principles, matching principles, full disclosure principles, materiality principles, going concern principles, economic entity principles, and so on. In this context, principles of accounting refers to the broad underlying concepts which guide accountants when preparing financial statements. 3.Principles of accounting can also mean generally accepted accounting principles (GAAP). When used in this context, principles of accounting will include both the underlying basic accounting principles and the official accounting pronouncements issued by the Financial Accounting Standards Board (FASB) and its predecessor organizations. The official pronouncements are detailed rules or standards for specific topics
Verifying and invoice breach.
A number of basic accounting principles have been developed through common usage. They form the basis upon which modern accounting is based.
Los principios básicos de la contabilidad es la prevención y buen manejo financiero de la empresa manteniendo observancia de los temas detallados en el informe periodo contable, el conservadurismo, consistencia fiabilidad etc, como elementos de consulta que nos permiten tener mejor encaminado la toma de decisiones en este área especifica
Accounting - Accounting principles
The impact of accounting principles (otherwise known as conventions,
doctrines or assumptions) on the preparation and presentation of financial
information is an important aspect of all Accounting units. These
principles support the general accounting concepts.
These principles are described in the following pages. It is also
important to recognise how they may be breached.
The life of the business is broken up into arbitrary periods for the
purpose of measuring profit.BREACH
The owner decides to wait until the project is completed before preparing
the financial reports.
May also be known as prudence. Losses should be recognised as soon as the
business is aware of their likely event whilst profits should not be
recognised until they actually occur.BREACH
The net realisable value of stock has fallen below cost yet the owner
refuses to adjust cost of goods sold calculations.
Accounting reports from one period to the next should be prepared on the
The owner uses one method of depreciation for a particular asset in one
period and an alternative method in the second period.
Data used in accounting should be subject to stringent internal
Price calculations are based on outdated information.
The owner is obligated to disclose any transactions of a significant
financial nature in their reports.BREACH
The owner determines not to include the recent sale of property in the
financial reports as this may deter potential buyers of the business.
Allows for the fact that no two firms are the same and therefore may use
different accounting methods.BREACH
The owner decides that because the business down the road uses the
straight line method of depreciation his business should do the same.
Recognises that the business, from an accounting viewpoint, is separate
from the owner.BREACH
The owner includes in the business balance sheet personal assets such as
his golf clubs.
Assumes that the life of the business is ongoing, indefinite and
continuous. Also known as the continuity principle.BREACH
The owner does not wish to prepare a balance sheet but rather reports
non-current assets as costs in the period they were acquired.
All items are recorded at the original cost, that is, the cost at which
they were acquired. BREACH
Property owned by the business is shown at the higher market value rather
than for the amount at which it was originally acquired.
Sets out the point of time at which revenue may be recognisedBREACH
A contract is signed for advertising in your magazine. Although you will
not include any advertising in this period's work you still include the
revenue paid in advance.
Is concerned with which data should be disclosed in financial reports. All
transactions regardless of size should be recorded.BREACH
The owner does not bother to record minor withdrawals of stock from the
Only events whose impact can be measured in money terms can be treated as
a financial transaction and thus entered in the books of the business.All
transactions should be recorded in money terms.BREACH
Stock is shown in financial reports in quantity amounts.
All transactions recorded in the books of the business are supported by
Payments are made and recorded without supporting evidence such as
invoices or cheque butts.
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