Accounting Concepts

Front

A business is an entity that is separate from its owner(s)

Back

Business entity

Front

Only activities that can be reliably and objectively measured in terms of money should be recorded in the accounting books

Back

Money measurement

Front

A transaction should not be recorded and included in the financial statements until it has actually happened and has been realized

Back

Realisation

Front

Revenue earned and expenses incurred should be recorded at the time they take place, and not at the time they are actually paid for

Back

Accrual/matching

Front

Financial statements are prepared on the basis that the business will continue for the foreseeable future

Back

Going concern

Front

Assets, liabilities and items of revenue and expense are recorded and reported at their actual cost and not the current value

Back

Historical cost

Front

Accounting information must be free from bias and supported with verifiable evidence/document

Back

Objectivity

Front

A business must choose one method of accounting treatment and apply it consistently in every accounting period unless there is a valid reason to change the method

Back

Consistency

Front

There are two aspects of accounting, one represented by the assets of the business and the other, equal and opposite, by the claims against them

Back

Dual aspect

Front

Transactions should be shown in accordance with their real substance and not their legal form, which means show how the transaction affects the economic situation of the business

Back

Substance over form