Cheatography
https://cheatography.com
Accounting ConceptsRules or guidelines that accountants follow when drawing up accounts. |
Last onesBusiness Entity | Money Measurement | Dual Aspect | Financial affairs of the business should be completely separate from those of the owner | Financial Records should be expressed in monetary terms. | Every transaction has 2 effects on the business's accounts. |
| | Statements of Standard Accounting PracticeGoing Concern Concept | Consistency Concept | Prudence Concept | Accruals or Matching Concept | Assumes that a business will carry on tradinf for the foreseeable future. | States that the accounts of a business should be prepared on the same basis every year. | States that accountants should be cautious when reporting the financial position of a business. revenue and profit should not be recorded unless it is certain; anticipate all possible losses and record them as soon as they are known; choose the lowest value when faced with a choice of asset values or revenue; highest value when referring to costs | Accruals: revenue whould be recorded when it is earned and not hen the money is received. (same goes to costs). Matching: states that when calculating profit, revenue should be matched against expenditure incurred in earning it. |
| | OtherObjectivity | Historical Cost | Realization | Materiality | Accounts should be based on verifiable evidence rather than personal opinion | Accounting should be based on the original costs incurred in the transaction | Revenue shouldn't be recognized until the exchange of goods or services has taken place. | Accountants should avoid wasting time trying to accurately record items of expenditure which are trivial. |
| | |
Created By
Metadata
Comments
No comments yet. Add yours below!
Add a Comment
More Cheat Sheets by marie.madero