changes in financial information are reported for a specific period of time in the form of financial statements
financial statements contain all information necessary to understand a business's financial condition
financial information is recorded and reported separately from the owner's personal financial information
the same accounting procedures are followed in the same way in each accounting period
Financial statements are prepared with the expectation that a business will remain in operation indefinitely.
the actual amount paid for merchandise or other items bought is recorded
Matching Expenses with Revenue
Revenue from business activities and expenses associated with earning that revenue are recorded in the same accounting period
Business activities creating dollar amounts large enough to affect business decisions should be recorded and reported at separate items in accounting items in accounting records and financial statements.
A source document is prepared for each transaction.
Realization of Revenue
Revenue is recorded at the time goods or services are sold.
Unit of Measurement
Business transactions are stated in numbers that have common values; that is, using a common unit of measurement.