Grace_AccountingTheories_Identification

The activities of a business are separate from the actions of the owner. All transactions are recorded from the point of view of the business.

The life of a business is divided into regular time intervals.

Business activities that have occurred, regardless of whether cash is paid or received, should be recorded in the relevant accounting period.

Once an accounting method is chosen, this method should be applied to all future accounting periods to enable meaningful comparison.

A business is assumed to have an indefinite economic life unless there is credible evidence that it may close down.

Transactions should be recorded at their original cost

Expenses incurred must be matched against income earned in the same period to determine the profit for that period.

A transaction is considered material if it makes a difference to the decision-making process.

Only business transactions that can be measured in monetary terms are recorded.

Accounting information recorded must be supported by reliable and verifiable evidence so that financial statements will be free from opinions and biases.