fabm 1.2

• Separate entity concept views the business as distinct from its owner(s), recording only business transactions, not personal ones
• Historical cost concept records assets at their acquisition cost
• Going concern assumption assumes the business will continue to exist indefinitely
• Matching recognizes some costs as assets and expenses only when related revenue is recognized
• Accrual Basis records income when earned and expenses when incurred
• Prudence involves caution in judgments under uncertainty, choosing unfavorable outcomes to prevent overstatement of assets or income
• Reporting Period divides the business life into reporting periods
• Stable monetary unit states assets, liabilities, equity, income, and expenses in a common unit of measure
• Materiality concept considers an item material if its omission or misstatement could influence economic decisions
• Cost-benefit principle states that the costs of processing and communicating information should not exceed the benefits
• Full disclosure principle communicates information reflecting a balance between detail and conciseness
• Consistency concept ensures like transactions are accounted for similarly from period to period
• Philippine Financial Reporting Standards consist of Philippine Financial Reporting Standards (PFRSs), Philippine Accounting Standards (PASs), and Interpretations
• Fundamental Qualitative Characteristics in accounting include Relevance and Faithful Representation
• Relevance in accounting means information can affect user decisions and includes predictive value, confirmatory value, and materiality
• Faithful representation in accounting provides a true, correct, and complete depiction of what it represents, including completeness, neutrality, and being free from error
• Enhancing Qualitative Characteristics in accounting help enhance the usefulness of information for users