Accounting is process of identifying measuring and communicating economic information to

permit informed judgement and decission by users of the information.For instance ,the user of
accounting are managers,tax inspector,the bank. And it has several objectives such as what
their business is worth,how much cash they have in any accounting transaction .According to
Wood ,(2002). There are several principle of accounting are to be followed are explained below.
Acording to

a. Going concern

States that companies need to be treated as if they are going to continue to exist .This means
that we must assume the company is not going to be dissolved or declare of bankrupt unless we
have evidence to the contrary.Thus we should assume that there will be another accounting
period in the future.

b. Materiality concept

Anything that would change financial statement users mind or decision about the company
should be recorded in the financial statement. If a busness event occurred that is not significant
that an investors or creditor would not care about it, the event neead not be recorded.

c. Business entity concept

Is the idea that the business and the owner of the businness are separete entities and should be
accounted for separately this concept also applies to different busness. Each business should
account for its own transaction separately.

d. Historical cost concept

Requires companies to record the purchase of goods, servise or capital assets at the price they
paid for them. Assets are then remaining on the balance sheet at their historical without being
adjusted for fluctuation in markert value.

e. Cost benefit principales

Limits the required amount of research and time to record or report financial information if the
cost outweighs the benefit. Thus if recording an immaterial event word cost the company a
material amount of money, it shiould be forgone.

f. Accrual concept

This when both income and expenditure should be recognised and accounted for as they are
earned and incurred.
g. Realization concept

Enterprises should not recognise revenue unless they are realized either in form of cash or any
other assets .

h. The dual concept

This concept provide double entry systeam that assets equals to capital plus
liability(ASSETS=CAPITAL+LIABILITY). This means about bringing about the accounting equation.

i. Consisteancy principle

The consistency principle states that once you decide on an accounting method or principle to
use on your business, you nead to stick it and follow this method through your accounting
period .All accounting principles and assumptions should be applied consistently from period to
the next.This ensure that financial statement are comparable between period through out the
company history.

j. Revenue recognition principle

Companies should record their revenue when it is recognised, or in the same time period of
when it was accrued (Rather than when it was received).Requires companies to record revenue
when it is earned instead of when it is collected.This accrual basis of accounting gives a nmore
accurete picture of financial event during the period.

k. conservatism principle

accountants should always error on the conservative side possible in any situation.this prevent
accountant from over estimating future revanues and underestimated future expenses that
could mislead finincial statement users.According to Tuovila,(2021)

l. objective principle

financial statement,accounts records,and financial information as a whole should be

independent and free from bias.the financial statement are meant to convey the financial
positision of the company and not to persuade end users to take certain actions. According to
Tuovila,(2021)

REFERENCE
Glantion M.W.E.(2005):Basic Financial Accounting,3rd ed .Pitman Publishing,London.5,

Wood,F.(2002);Business Accounting;9th ed.,vol.2,Pitman,Publishing,London.5.

Tuovila,A.,2021.corporate financial&Accounting>financial statements.Available

at :https://www.Investopedia.com/terms/a/a/accounting-principle.

Kilagane Y.S.M,;(2006),Financial Accounting for Professional Students; volume one.