13 Main Accounting.pdf

13 Main Accounting Concepts

1. THE 13 MAIN
ACCOUNTING
PRINCIPLES
SWIPE

2. 1.ACCRUAL
Nicolas Boucher
Transactions need to be
recorded in the time period
in which they occur,
regardless of when the
actual cash flows for the
transaction are received

3. 2. CONSERVATISM
Requires company accounts
to be prepared with caution
and high degrees of
verification.
All probable losses are
recorded when they are
discovered, while gains can
only be registered when
they are fully realized.
Nicolas Boucher

4. 3. CONSISTENCY
Nicolas Boucher
Once you adopt an
accounting principle or
method, you should
continue to use it until a
demonstrably better
principle or method comes
along.

5. 4. COST
Nicolas Boucher
A business should only
record its assets, liabilities,
and equity investments at
their original purchase
costs.

6. 5. ECONOMIC ENTITY
Transactions of a business
should be kept separate
from those of its owners
and other businesses.
Nicolas Boucher

7. 6. FULL DISCLOSURE
Nicolas Boucher
A company should include
in or alongside its
financial statements
all of the information that
may impact a reader's
understanding of those
statements.

8. 7. GOING CONCERN
Nicolas Boucher
A business will remain in
operation for the
foreseeable future.

9. 8. MATCHING
Companies need to report
expenses at the same time
as the revenues they are
related to.
Nicolas Boucher

10. 9. MATERIALITY
Nicolas Boucher
All items that are
reasonably likely to impact
investors’ decision-making
must be recorded or
reported in detail in a
business’s financial
statements.

11. 10. MONETARY
Nicolas Boucher
Business transactions
should only be recorded if
they can be expressed in
terms of a currency. In
other words, anything that
is non-quantifiable should
not be recorded a business'
financial accounts.

12. 11. RELIABILITY
Only those transactions
that can be proven should
be recorded.
Nicolas Boucher

13. 12. REVENUE
RECOGNITION
Nicolas Boucher
You should only recognize
revenue when it is earned.

14. 13. TIME PERIOD
Nicolas Boucher
A business should report
their financial statements
appropriate to a
specific time period.

15. Credits for the definitions:
IFRS, GAAP, Investopedia.com, Accountingtools.com
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