Accounting Concepts

HideShow resource information

Prudence

Accounts should always report a conservative figure

Example: Provision of Bad Debts

Accruals

Match incomes and expenses to the year they are earned/incurred, this results in the correct measurement of profit.

Sell a good today and will be paid next you, will put this in this years sales.

Realisation

Only record a sale once the invoice has changed hands (sale is recognised) irrespective of whether cash has changed hands.

Example: Sale of goods on sale or return basis.

Materiality

Non-current assest is worth so little it is not classified specifically

Comments

No comments have yet been made

Similar Accounting resources:

See all Accounting resources »See all Accounting Concepts resources »