Accounting Concepts

2. This concept states that all assets and liabilities are recorded at their original cost
6. free of any errors
10. business should reveal all relevant information
12. Accounting data should be capable of making a difference in decision making
14. entity has capacity to enter into agreements or contracts, assume obligations, incur and pay debts
15. free from bias
16. significant financial data must be disclosed in the financial statements
17. requires that all expenses incurred during the period should be matched with the revenue earned during that period

1. Two accountants studying the same report should come to the same conclusion
3. states that the business should use the same accounting policies or methods from one period to the next
4. anticipate no profit but provide for all possible losses
5. assumed that the life of the business should be divided into equal arbitrary periods
7. Accounting data is available on time for decision making
8. accounting data should be compared with similar years or with similar accounting firms
9. assumes that revenues and costs are recognized and included in the financial statements as they are accrued or earned
11. This principal states that profit should only be brought into account when it is actually realised
13. Entity is where a business is regarded as separate and distinct from its owners