Businesses must practice and adhere to rules, assumptions or principles consistently. They cannot change their practices without concreate reasons.

Businesses must avoid overstating values of assets and revenue, and understating liabilities and expenses when recording transactions.

. The revenues earned in an accounting period must be matched against the expenses incurred in order to generate revenues in the same period.

Revenues are recognized and recorded when goods and services are sold or provided regardless of whether cash has been received or not. Expenses will be recorded when the goods and services were used in accounting period regardless of whether it has been paid for or not.

Only the data from transactions which affect and influence decision making is considered making and should be accounted for

Business and its owner are two separate entities. The business’s transactions must be accounted separately from the owner’s transactions

Accounts are prepared with the assumption that the business or organization will continue to operate for a foreseeable future.

Accounting records and statements are based on the most reliable data available so that they will be as accurate and as useful possible.

Financial data must be recorded and presented in a financial configuration that is in monetary value, such as Ringgit in Malaysia and Yen in Japan

Business activities can be divided into specific periods, for example, a month, a quarter, six month or a year depends on the business