Transaction - is any event that affects both the financial position of the business entity and can be reliably determined.
Source Documents - is any printed evidence of a business transaction that describes the essential facts of that transaction
Financial Reporting Standards (FRS) - these are the rules that govern how accountant measure, process and communicate financial information.
BASIC CONCEPT AND ASSUMPTIONS
1. Entity Concept - refers to one businesa separate from its owners
2. Going Concern - aka continuity assumption; recognizes that a firm will remain in operation for the foreseeable future.
3. Time Period - aka periodicity assumption; timely financial reports can be monthly, quarterly, semi-annually or annually
4. Unit of Measurement or Monetary Unit - transaction should be in money terms.
BASIC PRINCIPLES
1. Objectivity Principle - transactions must be supported by objective evidence
2. Historical Cost Concept - assets and liabilities recorded at their transaction cost
3. Revenue Recognition and Expense Recognition
4. Materiality - material events must be accounted for according to accounting rules; has a significant effect.
5. Consistency Principle - one accounting method from period to period for accounting info to be comparable
6. Conservatism Concept - accounting alternative are available
7. Realization Principle - revenue should be recorded only when sale had been made and earned
8. Matching Principle - expenses be matched to revenues
-Cash Accounting
-Accrual Accounting
9. Full Disclosure Principle -financial statement should be complete
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Accounting
RandomThis book is filled with accounting lessons specially crafted for accounting students and aspiring accountants. Dive into the world of numbers and financial know-how as I guide you through essential concepts and practical insights. Whether you're ju...
