MATERIALITY GOING-CONCERN

The information which will have a material effect Business may continue forever and will carry
should form a part of the financial reports and out its goals & plans in foreseeable future with
recording transactions. no intention of liquidation.

MONETARY UNIT BUSINESS ENTITY

Transactions that carry a monetary value &
Owner & business as two different entities
stated in terms of a currency (for example $ in
having different liabilities
the U.S.) should only be recorded.

HISTORICAL COST FULL DISCLOSURE

Disclosure of all important information for the
Recordation of the assets should be on their
users, lenders or investors within the financial
purchased values, purchased ow or years ago.
statement reports or as a footnote.

MATCHING CONSERVATISM
Cost should be matched with the revenue If a situation arises where there are 2
generated. acceptable options for reporting an item,
The debit side should match with the credit side. accountant goes for less favorable option.

TIME PERIOD OBJECTIVITY

There should be a standardize time period of Financial statements of an organization must be
reporting the financial statements and recording
presented with supporting solid evidence.
transactions usually monthly, quarterly or annually.

ACCRUAL ACCOUNTING
Recognition of revenues should be on occurrence of transaction regardless of the actual
receipt of the amount.
Also, recognition of revenue should be on the accrual basis of accounting.