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Concepts & Principles of Accounting, Assumed that the business will…
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Assumed that the business will continue to expand & operate in the future without being closed or sold.
Report all the business transactions or events in monetary units. Assumed that the monetary value is stable.
The accounting period must be consistent in order to enable comparison of business performance between accounting periods. For example, Air Asia Financial Reporting date is from 1 July 2019 until 30 June 2020.
In contrast to revenue recognition principles, matching principles provides guidance in recognition expenses.
There are many UNCERTAINTIES in business activities. For example when an enterprise sells goods to its customers on credit, there is uncertainty that the customer will not pay in full.
Business should record the business activities based on the cost value or the actual price stated in the source of document, that is the current value at the time of the transaction.
For example, Motor Vehicle, Office Equipment, Premise, Buildings...
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Business should report relevant, reliable,timely, unbiased, free from mistakes or errors information about the business activities.
Objectivity principle requires the accounting records & reports be based upon objective evidence.
For example, objective evidence are invoice, receipt, cash bill, debit note, credit note & others..