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Accounting Principles

CHER@MCG
STUDY
PLAY
Conservatism
losses should be recorded when probable, but gains are only recorded when certain, so that liabilities are not understated and assests are not overstated.
Historical Cost
transactions should be recorded at their original purchase price, as this value is verifiable by source document evidence.
Entity
the business is seperate from the owner and other entities and it's records should be kept on this basis.
Reporting Period
the life of the business is divided into 'periods' of time. Re ords should reflet the 'period' in which the transaction occurs.
Monetary Unit
all items must be recorded and reported in the currency of the country of which the reports are prepared
Consistency
the business should use the accounting methods to allow for the comparison of reports from one period to the next.
Going Concern
the life of the business is assumed to be continuous and its records are kept on that basis.