Anonymous
Feb 8
Mention six principles of accounting?
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Feb 8
1. Entity Principle: This principle states that the financial transactions of a business should be kept separate from the personal transactions of its owners or employees. It ensures that the financial records of the business are distinct and accurate.
2. Going Concern Principle: This principle assumes that a business will continue to operate indefinitely unless there is evidence to the contrary. It allows for the preparation of financial statements on the assumption that the business will continue to operate and fulfill its obligations.
3. Matching Principle: This principle states that expenses should be recognized and recorded in the same accounting period as the revenues they help generate. It ensures that the expenses incurred to generate revenue are properly matched with the revenue in the financial statements.
4. Historical Cost Principle: This principle requires that assets and liabilities be recorded at their original cost when acquired. It ensures that the financial statements reflect the actual cost of acquiring assets and liabilities, rather than their current market value.
5. Revenue Recognition Principle: This principle states that revenue should be recognized when it is earned and realizable, regardless of when the payment is received. It ensures that revenue is recorded in the accounting period in which it is earned, rather than when the cash is received.
6. Consistency Principle: This principle requires that accounting methods and procedures be applied consistently from one accounting period to another. It ensures that financial statements are comparable over time and allow for meaningful analysis and decision-making.
2. Going Concern Principle: This principle assumes that a business will continue to operate indefinitely unless there is evidence to the contrary. It allows for the preparation of financial statements on the assumption that the business will continue to operate and fulfill its obligations.
3. Matching Principle: This principle states that expenses should be recognized and recorded in the same accounting period as the revenues they help generate. It ensures that the expenses incurred to generate revenue are properly matched with the revenue in the financial statements.
4. Historical Cost Principle: This principle requires that assets and liabilities be recorded at their original cost when acquired. It ensures that the financial statements reflect the actual cost of acquiring assets and liabilities, rather than their current market value.
5. Revenue Recognition Principle: This principle states that revenue should be recognized when it is earned and realizable, regardless of when the payment is received. It ensures that revenue is recorded in the accounting period in which it is earned, rather than when the cash is received.
6. Consistency Principle: This principle requires that accounting methods and procedures be applied consistently from one accounting period to another. It ensures that financial statements are comparable over time and allow for meaningful analysis and decision-making.
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