When entering the accounting career, there are basic accounting principles that are important in the accounting and financial reporting process of any business or enterprise. The following article by MISA MeInvoice provides information on 7 basic accounting principles and 5 additional accounting principles that everyone needs to master.
Note: before learning about accounting principles. You can first learn about the accounting industry. And the jobs and career paths of. Accountants.see more: what does an accountant do .salary and career path in accountingaccounting principles. Are a set of regulations that are standardized.conventionalized and applied by companies. And organizations in the process of accounting and.
preparing financial statements .
See more: What is accounting ? Things to know about accounting
Correct application of accounting principles helps the accounting information provided, summarized, etc. to be authenticated to a certain level of reliability.
Accounting often applies many principles, mainly including 7 basic accounting principles, specifically as follows:
II. 7 basic accounting principles
1. Accrual basis principle
Regulates financial and accounting operations of enterprises related to assets, liabilities; revenue, expenses, equity capital, etc.
Information must be recorded carefully in the korea telegram data accounting books at the time of occurrence; regardless of the actual time of receipts and payments or similar;
Financial statements prepared on the accrual basis help readers clearly understand the past, present
and future financial situation of that company
The principle helps to realize that all economic the extra responsibilities of being a team leader transactions must be recorded immediately in the accounting books as soon as the transaction occurs instead of basing on actual revenue and expenditure;
2. Going concern
All financial statements must be prepared on the assumption brazil data that the business is and will continue to operate and produce in the near future.
In cases where the facts differ from the assumptions, the report should be prepared on a different basis and have a satisfactory explanation of that basis.
Accountants must not set up reserve accounts in excess of the operating principles;
Provisions should not be overstated as assets and income should not be understated as expenses;
Revenue and income should only be
recognized when there is certain evidence of the ability to generate economic benefits;
Expenses are recognized when it can be demonstrated that they are probable to be incurred.
3. Historical cost principle
Corporate assets must be recorded at cost, where cost is the price the company paid to acquire the asset;
the original cost is calculated based on. The amount of money or the equivalent value of.the amount paid, payable or calculated .on the fair value of the asset determined at the time the asset is recorded.
Accountants are not allowed .to arbitrarily adjust when the original price .of assets changes.