to show the assumptions followed in preparing the statement and how financial elements have been measured.
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Income Statement
To measure the profit/loss for the period
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Statement of Fianncial Position
To measure assets liabilities and equity at one point in time.
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Statement of Cash Flow
To show where cash has come from and how it has been spent over the period.
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Accounting Entity
Financial affairs of an entity must be kept separate and distinct from the fianancial affairs of the owner and other entities.e.g transactions of the business only include in the accounting records exclude the owners transactions
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Monetary Measurement
All transactions are measure in dollars terms.If transactions cannot be expressed in money values it will not be recorded in the accounting recordse.g number of years that the business has been trading will not appear in the financial statement
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Reporting Period
Is the business'scontinuing life is dividing into nominated time periods in order to measure fiancial performance and fiancial position on aregular/timely basis
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Historical Cost
Transactions are recorded at the amount of cash paid or valuable at the time of the transactions this means that assets are recorded at their original price when required
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