Accounting Principles

 Here are the basic accounting principles:

  1. Business Entity Principle: This principle states that the business entity is separate from the owner’s personal transactions. Business transactions are recorded and reported separately from personal transactions.

  2. Going Concern Principle: This principle assumes that the business will continue to operate in the foreseeable future, and its financial records are maintained accordingly.

  3. Money Measurement Principle: This principle states that accounting records only transactions that can be expressed in monetary terms.

  4. Cost Principle: This principle states that assets are recorded and reported at their original cost, rather than their current market value.

  5. Matching Principle: This principle states that expenses incurred in earning revenue should be matched to the revenue earned in the same accounting period.

  6. Revenue Recognition Principle: This principle states that revenue should be recorded when it is earned, not when the cash is received.

  7. Materiality Principle: This principle states that only transactions that are significant enough to affect the financial statements need to be recorded.

  8. Conservatism Principle: This principle states that when there is uncertainty about the value of an asset or liability, the accountant should choose the lower value to avoid overstating profits or understating losses.

  9. Consistency Principle: This principle states that once an accounting method is adopted, it should be consistently applied in subsequent accounting periods.

  10. Full Disclosure Principle: This principle requires that all relevant and material information should be disclosed in the financial statements.

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