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Accounting Principles (Business Entity (affairs of business must be kept…
Accounting Principles
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Duality
every transaction has two aspects, a debit and a credit. Therefore the double entry system is used.
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Consistency
if accounting method is used, then method cannot be changed later
Matching
income and expenses are matched in the period that they take place. Therefore adjustments have to be made to the accounts for accruals and prepayments.
Prudence
never overstate your profits, but provide for all possible losses
Historical cost
assets are recorded at their cost or purchase price, not at their present value
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