Accounting Principles

Accounting follows a specific framework of core standards which makes the data produced through an accounting system significantly. Without these core standards accounting would be irrelevant, insignificant, unreliable and questionable.

These accounting principals include:

  1. Accrual Concept
  2. Going Concern Concept
  3. Separate Entity Concept
  4. Monetary Unit Assumption
  5. Time Period Principle
  6. Revenue Recognition Principle
  7. Full Disclosure Principle
  8. Historical Cost Concept
  9. Matching Principle
  10. Relevance and Reliability
  11. Materiality Concept
  12. Substance Over Form
  13. Prudence Concept
  14. Understandability Concept
  15. Comparability Principle
  16. Consistency Concept

These principles are the building blocks that form the foundation of more complicated and specialized principles known as GAAP or generally accepted accounting principles such as the International Financial Reporting Standards, US GAAP, etc. They deal with matters like accounting for revenue, accounting for income taxes, accounting for business combinations, etc.