Accounting concepts

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Objectivity
All accounting information should be based on fact. Every transaction must be backed up by documentation
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Cost
Assets should be valued at cost or net realisable value whichever is the lowest
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Going Concern
When preparing financial statements assume business will continue to trade for forseeable future
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Accruals
If profits are calculated for a period of time. Revenue for that year to be matched with expenses for that year too.
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Consistency
Apply same accounting policies and procedures from one financial period to the another. Make comparison valid and reliable.
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Prudence
Where there is doubt, asset values and profits should be understated than overstated,
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Materiality
Ensure that all information provided is significant to the users of the statements.
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Realisation
Revenue should be recognized when its certain. That is a sale should only be included in a business profit calculations if cash or a promise to pay cash has occured
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Business entity
All transactions recorded in business' accounts only relate to the organisation.
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Other cards in this set

Card 2

Front

Assets should be valued at cost or net realisable value whichever is the lowest

Back

Cost

Card 3

Front

When preparing financial statements assume business will continue to trade for forseeable future

Back

Preview of the back of card 3

Card 4

Front

If profits are calculated for a period of time. Revenue for that year to be matched with expenses for that year too.

Back

Preview of the back of card 4

Card 5

Front

Apply same accounting policies and procedures from one financial period to the another. Make comparison valid and reliable.

Back

Preview of the back of card 5
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