The Matching Principle in Accounting

The matching principle or expense recognition principle forms a necessary part of the accrual basis of accounting, and ensures that expenses are matched to revenues recognized in an accounting period.

Last modified September 29th, 2022 by Michael Brown
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Monetary Unit Assumption

The monetary unit concept or monetary unit assumption one of the fundamental accounting principles, and states that only transactions which involve a monetary amount are recorded in the financial statements of a business.

Last modified November 3rd, 2022 by Michael Brown
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Economic Entity Assumption

The economic entity concept or business entity concept is one of the fundamental accounting principles, and states that a business is a separate entity from its owners. In practice this means that a business must keep separate financial records, which only include accounting transactions relating to the business.

Last modified January 7th, 2020 by Michael Brown
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Qualitative Characteristics

Qualitative characteristics are part of the accounting framework and are attributes which enable financial information to be useful and understandable to users.

Last modified January 7th, 2020 by Michael Brown
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Accounting Constraints

Accounting constraints sometimes referred to as modifying principles, are used to modify accounting assumptions and accounting concepts to make accounting information in financial statements more useful for users.

Last modified July 10th, 2020 by Michael Brown
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Accounting Assumptions

Financial statements are multipurpose documents used by many different parties for different reasons. For this reason financial statements need to be based on a generally agreed accounting framework or structure so that all parties understand how they are produced. Accounting assumptions can be considered to be the foundations on which the framework is based.

Last modified January 22nd, 2020 by Michael Brown
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Accounting Principles

Double entry bookkeeping is the first stage in producing a set of financial statements for a business.

For the financial statements to be useful the users (the bank manger, tax authorities, owners, investors, etc) need to have agreed and understand how they were compiled from the underlying information, these understandings form the principles of accounts.

Last modified October 28th, 2022 by Michael Brown
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Accounting Concepts

The accounting assumptions are supplemented by a number of accounting concepts, which act as guides on how particular business transactions should be reported in financial statements, and allow them to be objective (not subject to bias or influenced by personal feelings or opinions).

Last modified July 10th, 2020 by Michael Brown
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