The activities of a business are separate from the actions of the owner. All transactions are recorded From the point of view of the business.
Accountingperiod
The life of a busies is divided into regular time intervals.
Accrualbasisofaccounting
Business activities that have occurred, regardless of whether cash is paid or received, should be recorded in the relevant accounting period.
Consistency
Once an accounting method is chosen, this method should be applied to all future accounting periods to enable meaningful comparison.
Goingconcern
A business is assumed to have an indefinite economic life unless there is credible evidence that it may close down.
Historical cost
Transactions should be recorded at their original cost.
Matching
Expenses incurred must be matched against income earned in the same period to determine the profit for that period.
Materiality
A transaction is considered material if it makes a difference to the decision-making process.
Monetary
Only business transactions that can be measured in monetary terms are recorded.
Objectivity
Accounting information recorded must be supported by reliable and verifiable evidence so that financial statements will be free from opinions and biases.
Prudence
The accounting treatment chosen should be the one that least overstates assets and profits and least understates liabilities and losses.
Revenuerecognition
Revenue is earned when goods have been delivered or services have been provided.