The life of a business is divided into regular time intervals to allow financial statements to be prepared at regular time periods, e.g., monthly or yearly.

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

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

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

Relevant information should be reported in the financial statements if it is likely to make a difference to the decision-making process.

Business and owner are treated as two separate entities. All transactions are recorded from the point of view of the business. Only business transactions affecting the business are recorded in the business books.

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

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

Transactions should be recorded at their original cost.

Revenue is recorded as earned when goods have been sold and delivered or services have been provided.

The accounting treatment chosen should be the one that least overstates assets and profits and least understates liabilities and losses.