LOWIE JAY M.

BULADOLA BSIT - 2

ACCRUAL PRINCIPLE
Accrual accounting is an accounting method where revenue or expenses are recorded when a
transaction occurs vs. when payment is received or made. The method follows the matching principle,
which says that revenues a
CONSERVATISM PRINCIPLE
Approaching your financial statements using conservatism accounting ensures that they're prepared
with caution. The aim of this concept is to protect investors from potentially inflated revenues and
assets. This approach also limits any understatement of liabilities.
CONSISTENCY PRINCIPLE P
In accounting, consistency requires that a company's financial statements follow the same accounting
principles, methods, practices and procedures from one accounting period to the next. This allows the
readers of the financial statements to make meaningful comparisons between years.
COST PRINCIPLE
The cost principle is an accounting principle that records assets at their respective cash amounts at
the time the asset was purchased or acquired.
ECONOMIC ENTITY PRINCIPLE
The economic entity principle is an accounting principle that states that a business entity's finances
should be keep separate from those of the owner, partners, shareholders, or related businesses.
Debtor accounting and invoicing software makes it easy to keep track of your company accounts and
finances.
FULL DISCLOSURE PRINCIPLE
The need in certain situations (such as real estate transactions) for both parties to tell the whole truth
about all information relevant to the transaction.
GOING CONCERN PRINCIPLE
Going concern is an accounting term for a company that is financially stable enough to meet its
obligations and continue its business for the foreseeable future. Certain expenses and assets may be
deferred in financial reports if a company is assumed to be a going concern.
MATCHING PRINCIPLE
The matching principle is part of the Generally Accepted Accounting Principles (GAAP), based on the
cause-and-effect relationship between spending and earning. It requires that any business expenses
incurred must be recorded in the same period as related revenues.
MATERIALITY PRINCIPLE
Materiality is an accounting principle which states that all items that are reasonably likely to impact
investors' decision-making must be recorded or reported in detail in a business's financial statements
using GAAP standards.
MONETARY PRINCIPLE
A monetary item is an asset or liability carrying a value in dollars that will not change in the future.
These items have a fixed numerical value in dollars, and a dollar is always worth a dollar. The
numbers do not change even though the purchasing power of a dollar can potentially change.
RELIABILITY PRICIPLE
Reliability is an essential characteristic for accounting information to be useful for decision making.
Reliability represents the extent to which the information is unbiased, free from error, and
representationally faithful 
REVENUE RECOGNITION PRINCIPLE
Essentially, the revenue recognition principle means that companies' revenues are recognized when
the service or product is considered delivered to the customer — not when the cash is received.
Determining what constitutes a transaction can require more time and analysis than one might
expect.
TIME PERIOD PRINCIPLE
time period principle (or time period assumption) is an accounting principle which states that a
business should report their financial statements appropriate to a specific time period.