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ACCOUNTING PRINCIPLES, Expenses incurred during the accounting period will…
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- Expenses incurred during the accounting period will be matched against revenue earned during the same accounting period.
- Companies should choose the most suitable accounting methods and treatments, and consistently apply them in every period.
- The business and its owner(s) are to separate existence entity.
- Any private ad personal incomes and expenses of the owner(s) should not to be treated as the incomes and expenses for business.
- The business will continue in operational existence for the foreseeable future.
- Assets, services and any resulting liabilities will be recorded at cost.
- A transaction is considered to be material if it significantly affects the reported net income of the business.
- All transaction of the business are recorded in terms of money.
- It provides a common unit of measurement.
- The economic activities of a business can be divided into regular time periods.
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- Able to compare an entity's financial statements to identify trends and to compare with other entity's financial statements to evaluate their financial position.