Accounting principles

• The Duality assumption recognizes the economic relationships between assets and liabilities. That means for every asset, there is an equal and corresponding liability.
• Business entity

  Separate and distinct from it's owners and form other enterprise
• Regards the business enterprises as separate and distinct from it's owners and form other business

  Business entity principles
• Accounting is about quantitative information
• The information in accounting is likely to be financial in nature
• The information in accounting should be useful in decision making
• Accounting principles are the rules and guidelines that companies and other bodies must follow when reporting financial data
• Generally Accepted Accounting Principles (GAAP) represent the rules, procedures, practice and standards followed in the preparation and presentation of financial statements
• International Financial Reporting Standards (IFRS) are pronouncements issued by the International Accounting Standards Board (IASB) to enhance the comparability of financial statements worldwide
• Philippine Financial Reporting Standards (PFRS)/Philippine Accounting Standards (PAS) are the new set of Generally Accepted Accounting Principles (GAAP) issued by the Accounting Standards Council (ASC) to govern the preparation of financial statements
• Business Entity Principle regards the business enterprise as separate and distinct from its owners and from other business enterprises
• Time Period or Periodicity concept provides financial accounting information about the economic activities of an enterprise for specified time periods
• Going Concern Principle assumes that the business enterprise will continue to operate indefinitely
• Monetary Unit Principle states that amounts are stated in a single monetary unit
• Objectivity Principle states that all business transactions entered in the accounting records must be supported by verifiable evidence
• Historical Cost Principle states that all properties and services acquired by the business must be recorded at their original acquisition cost
• Accrual Accounting Principle recognizes revenue when earned regardless of collection and expenses when incurred regardless of payment
• Matching Principle states that expenses should be matched with the revenue generated
• Full Disclosure Principle states that all relevant and material information that will significantly affect financial statements must be indicated
• Conservatism Principle, also known as prudence, means exercising care in decisions regarding recognition of items in the accounting records
• Materiality Principle means that financial reporting is only concerned with information significant enough to affect decisions
• Consistency Principle means that approaches used in reporting must be uniformly employed from period to period to allow comparison of results between time periods