all assets acquired should be valued and recorded based on the actual cash equivalent or original cost of acquisition, and not the prevailing market value or future value.
Full Disclosure Principle
in the preparation of financial statements, the accountant should include sufficient information to permit the stakeholders to make an informed judgement about the financial condition at the enterprise.
Cost
refers to the amount spent when an item was originally obtained, whether that purchase happened last year or ten years ago; amounts are not adjusted upward for inflation.
Historical cost amount
what is the amount shown in financial statement referred to?
Matching Principle
this principle requires that expenses be matched with revenue.
Revenue Recognition Principle
this principle states that revenue are recognized as soon as goods have been sold or a service has been rendered, regardless of when the money is actually recieved.
Materiality Principle
this principle allows an accountant to violate another accounting principle if an amount is insignificant.
Materiality Principle
business transactions that may affect the decision of a user of financial information are considered important or material, and thus, must be reported
Conservatism & Prudence Principle
states that an entity must not overestimate its revenues, assets, and profits, besides that it must not underestimate its liabilities, losses, and expenses.
Objectivity Principle
this principle requires business transactions to have some form of impartial supporting evidence or documentation. Also, it entails that bookkeeping and financial recording be performed with independence, that is free of bias and prejudice.
