Accounting theories

Expenses incurred in the operation of a business to generate income must be matched against the income earned for the same period to determine the profit for the year.

State the accounting theory for the above.

The business and the owner are two separate entities. All transactions are recorded from the point of view of the business.

State the accounting theory for the above.

The life of a business is divided into regular time intervals, to facilitate reporting of the business performance.

State the accounting theory for the above.

A business is assumed to have an indefinite economic life.

State the accounting theory for the above.

Transactions are recorded based on reliable and verifiable information.

State the accounting theory for the above.

Non-current assets are recorded at their original cost.

State the accounting theory for the above.

Once an accounting method is chosen, this method should be applied to all future accounting years, so that comparisons of the accounting information can be meaningful.

State the accounting theory for the above.

Only business transactions measurable in monetary terms are recorded.

State the accounting theory for the above.

Possible losses are recognised when they are known, even if they are not realised, so that assets and profit are not overstated.

State the accounting theory for the above.

Income is recognised when it is earned, regardless of when money is received. Expenses are recognised when they are incurred, regardless of when money is paid.

State the accounting theory for the above.