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Discussion Board
1. Principles

a. The Measurement Principle: This principle requires that companies should use the cost of

acquisition while reporting their assets and liabilities than using the prevailing market value.

Therefore, it provides information that is more dependable though not much reliable.

b. The Revenue Recognition Principle: This principle contemplates that revenue should only

be recorded during the period they are earned and not when received. Furthermore, it does

not consider cash flow in the business (Wagenhofer, Alfred, 357). However, it requires that

losses should be recorded when they occurred.

c. The Matching Principle: This principle requires that expenses and revenue be matched

during a particular period. However, expenses are recognized when the product contribute

its revenue within a particular period. This principle provides an organization to have a

greater assessment regarding the actual revenue that a company makes hence enabling

determination of performance.

d. The Full Disclosure Principle: This principle necessitates that the kinds and amount of

information that are disclosed need to harmonize from the trade-off analysis hence the

information disclosed should be sufficient to be used in preparing and making a judgment

(Ely, Jeffrey "Beeps, 39). Therefore, the disclosure is usually presented in the financial

reports as additional information.

2. Assumptions
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a. The Going Concern Assumption: This assumption contemplates that business will

continue to exist in the future period (Blay, Allen, & Geiger, 593).

b. The Monetary Unit Assumption: It requires an organization to quantify all the information

that is needs to be recorded in the statement of financial reports.

c. The Time Period Assumption: This concerns that a particular transaction should fall under

a particular accounting period hence facilitating performance estimation at a particular time.

d. The Business Entity Assumption: This assumption requires all transactions should be

recorded in the first books of the business within a particular period from the firm and not

the owner of the business (Page, Michael, 682).

3. Constraints

a. The Materiality Constraint: This necessitates that fully disclosure of information that aid in

decisions in the organization should be made available.

b.The Cost-Benefit Constraint: It requires that greater beneficial information must be disclose

concerning the costs (Zhou, Lin, et al., 841).

From the above discussions, I believed that matching principle, full disclosure principle, period

assumption and cost benefits constraints are fundamental. This is because;

Matching principle is also vital given that it enables to company to match its expenses with

revenue, therefore, being able to ascertain some profits or losses that company made during a

particular period. Full disclosure principle helps in ascertainment of the relevant information

which has been included in the financial statements. The period assumption is also necessary

given the actual measurement of performance that the organization ought to determine after a

period. Lastly, I also consider cost-benefits constraints have important in that it ensures that the
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organization provides all the information recorded with greater benefits than cost (Zhou, Lin, et

al., 842).

References

Blay, Allen D., and Marshall A. Geiger. "Auditor fees and auditor independence:

Evidence from going concern reporting decisions." Contemporary Accounting Research 30.2

(2013): 579-606.

Ely, Jeffrey C. "Beeps." The American Economic Review 107.1 (2017): 31-53.

Page, Michael. "Business models as a basis for regulation of financial reporting." Journal

of Management & Governance 18.3 (2014): 683-695.

Wagenhofer, Alfred. "The role of revenue recognition in performance

reporting." Accounting and Business Research 44.4 (2014): 349-379.

Zhou, Lin, et al. "Cost/benefit assessment of a smart distribution system with intelligent

electric vehicle charging." IEEE Transactions on Smart Grid 5.2 (2014): 839-847.