Business Entity Principle – Flashcards
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business accounts are separate from its owner(s). Also means that different businesses account separately from each other, even under one owner.
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Business Entity Principle
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Financial information is stated by simple, unbiased information. It is involves the opinions of more than one person
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Objectivity Principle
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financial statements are based on actual costs incurred during business transactions.
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Cost Principle
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financial statements assume that business will continue operation rather than closing.
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Going-Concern Principle
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Transactions can be expressed in monetary units, which are the common denominators in business
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Monetary Unit Principle
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an organization's activities can be divided into specific time periods, like a month, a quarter, or a year.
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Time Period Principle
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Provides guidance on when revenue should be recognized on the income statement.
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Revenue Recognition Principle
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aims to report expenses in the same accounting period as the revenues that incurred said expenses.
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Matching Principle
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Requires a company to use the same financial system by period so that they are comparable across periods
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Consistency Principle
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when more than one estimate of amounts to be received or paid in the future are about equally likely, the less optimistic amount should be used.
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Conservatism Principle
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Financial statements report all relevant information about the operations and financial position of a company.
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Full Disclosure Principle
