Concept: a business's records should never be mixed with an owner's personal records and reports

Concept: When a source document is prepared for each transaction for evidence

Concept: When a business activity is large enough to impact business decisions, it should be recorded clearly in the financial statements

Concept: Financial statements are prepared with the expectation that business will continues its operation in future

Concept: The same accounting procedures must be followed in the same way each accounting period

Concept: The revenue from business activities and the expenses associated with earning that revenue are recorded in the same accounting period

Concept: Business transactions are reported in numbers that have common values. Meaning all reporting should be done in terms of money

Preparing Financial Statements states that the accounting records should be based on the original cost of the transaction.

The historical cost principle requires that when assets are acquired, they be recorded at