Accounting Principle

Principles Of Financial Accounting (The Key Principle You Should Kow)

Companies need to follow accounting principles and guidelines while reporting financial information. Generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS) provide principles and procedures to guide the preparation of financial statements. IFRSs are standardized accounting principles adopted by countries across the world. Historically, there have been locally accepted accounting regulations. However, the …

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What are the Principles of Accounting?

Basic Principles of Accounting are important guidelines that are followed to ensure that all businesses have financial statements prepared similarly. In this regard, it is rudimentary to understand that these guidelines are mostly unanimously applied across accounting bodies of all countries, which follow the IFRS (International Financial Reporting Standards). What is meant by Accounting Principles? …

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What Does Materiality Mean in Accounting? (Definition, Explanation, and Examples)

Definition of Materiality Materiality is one of the most important concepts in accounting. It is simply a measure of the impact of any financial misstatement on the decision-making ability of the given user. In this regard, it is important to note the fact that materiality is not a single ballpark figure. In fact, it is …

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What are Accounting Conventions? What Are the 4 Accounting Conventions?

Definition: Accounting conventions are a set of industry best practices adapted by company requirements to serve as guidelines to record financial transactions of the company. The accounting conventions play a crucial role in the transition to record financial transactions as per accounting standards in the company’s accounting system. Accounting conventions do not have any legal …

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How to Organize Invoices for Small Businesses? 7 Importance Tips with Guidance

If you run a business, you must become skilled in saving time and cost and becoming organized. Organized businesses are more productive. Invoices play an important part in the documentation of records for small businesses as they keep track of goods and services rendered to customers. The catalog and keep the track of movement as …

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Audit and Assurance in Auditing: What Are They? And How Does it Work?

What is Audit? The company’s management, board of directors, and shareholders hire qualified, competent, and independent audit firms (usually called CPA firms) to conduct the audit of the financial statements of their company. The audit is usually for a specific period (usually from 1 Jan to 31 December) for certain purposes including the requirement of …

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Modified Cash Basis And Why Use Modified Cash Basis Accounting?

Introduction: A modified cash basis of accounting, also known as the hybrid basis of accounting is a bookkeeping method that tries to get the best of both worlds i.e. cash basis and accrual basis accounting.  Cash basis accounting: A bookkeeping method in which only cash transactions are recorded by a business during an accounting period. Income …

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Reliability Principle in Accounting: Definition | Example | Explanation

Definition: Reliability Principle is the accounting principle that concern about the reliability of financial information that records and present in the entity’s financial statements. The principle of the reliability principle is that the transactions or event could records and present in the entity’s financial statements only if they could be verified with the reliable objective …

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