Accounting Concepts

Front

Historical Cost

Back

States that assets should be recorded at the cost price (price at which they were purchased).

Front

Business Entity/ Separate Entity

Back

States that the affairs of the business are to be treated separately from the personal activities of its owner/owners.

Front

Money Measurement

Back

States that only transactions that can be expressed in monetary terms should be recorded in the financial statements.

Front

Dual Aspect

Back

States that there are two aspects of accounting. One represented by the assets of a business and the other by the claims against them. They are always equal to each other. (Assets = Capital + Liabilities)

Front

Going Concern

Back

Implies that the business will continue to operate into the foreseeable future.

Front

Consistency

Back

Outlines that a company should use the same accounting methods and principles from one period to the next, ensuring comparability and reliability of the information.

Front

Prudence/Conservatism

Back

Suggests that when there are uncertainties or risks involved in estimating future events, a cautious approach should be taken.

Front

Realization

Back

Holds the view that profit can only be taken into account when realization has occurred.

Front

Accrual/matching concept

Back

Says that net profit is the difference between revenues and expenses incurred in generating those revenues.

Front

Materiality

Back

Refers to the significance or importance of an item or transaction in the financial statement.