Accounting Concepts and Principles
Accounting Concepts and Principles
Accounting Concepts and Principles
Which accounting
assumption is this principle
related to?
FULL DISCLOSURE PRINCIPLE
In the preparation of financial
statements, the accountant
should include sufficient
information to permit the
stakeholders to make an informed
judgment about the financial
condition of the enterprise.
MATCHING PRINCIPLE
This principle requires that
expenses be matched with
revenues. It means that in a
given accounting period, the
revenue recorded should have
its corresponding expense
recorded in order to show the
true profit of the business.
The use of accrual accounting procedures
assist the accountant in allocating
revenues and expense properly among
the accounting periods that comprise the
life of the business enterprise.
REVENUE RECOGNITION PRINCIPLE
MAJOR PRINCIPLE
OBJECTIVITY PRINCIPLE
This principle requires business
transaction to have some form of
impartial supporting evidence or
documentation. Also it entails that
bookkeeping and financial recording be
performed with independence, that is
free of bias and prejudice.
Example:
The purchase of merchandise from a vendor
requires an invoice to support the
transaction. This invoice should be approved
by the BIR and should state the nature of the
supplier, the description, quantity, and the
value of the goods purchased. Utility
expenses must be supported by statements
of account from utility companies like
Meralco and Cawadi.
OTHER CHARACTERISTICS OF
ACCOUNTING INFORMATION
•When financial reports are generated by
professional accountants, users expect
that the accounting information
presented is reliable and verifiable. The
consistency and comparability of the
accounting information reported are also
expected from the accountants.
•To be useful, financial
information must be relevant,
reliable and prepared in a
consistent manner.
QUIZ
Identification: