Accounting Concepts & Ethics

Accounting concepts

Going concern — assume the business will continue operating.
Accruals (matching) — record income/expenses when earned/incurred.
Consistency — use the same methods each period (for comparability).
Prudence — don't overstate profits/assets; recognise likely losses.
Business entity — keep the owner's affairs separate from the business.
Money measurement — record only what can be measured in money.
Materiality — small items can be treated simply.
Realisation — record revenue when the sale is made, not when cash is received.
Historic cost — record assets at original cost.