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Accounting, Historical Cost, Accounting Period, Principle of prudence,…
Accounting
Accounting Entity
Business is separated from owner
Transaction is recorded from the business pov
Owners are outsiders
accounting process is concerned with the activities of the business
monetary assumption
transactions are recorded in common monetary terms
a transaction that cannot be expressed in common monetary terms will be excluded
Going Concern
Assumes the business will operate for a long time
and wouldn't be selling its assets in the near future
when firm go out of bus, assets is valued at selling price
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adoption of cautious accounting practices
profits is recognised when earned
Provision is made to all probable loss
assumes the indefinite life of the bus
divided into arbitrary time periods
generally it is 1 year for external parties
but vary for internal reporting
treatment of a itemdepending on the significance and importance
depends on the judgement of accountants and the size of business
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