Accounting Principle

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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Monetary Unit Assumption: Definition | Explanation | Example

Definition: Monetary Unit Assumption is the accounting principle that concern about the valuation of transactions or event that entity records in its financial statements. In Monetary Unit Assumption, transactions or event could be recorded in the Financial Statements only if they could measure in the monetary term where those currencies are stable and reliable. USD …

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Materiality Principle in Accounting: Definition | Explanation | Example

Overview Materiality Principle or materiality concept is the accounting principle that concern about the relevance of information, and the size and nature of transactions that report in the financial statements. The main objective of the materiality principle is to provide guidance for the accountant to prepare the entity’s financial statements. And the most important thing …

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What is the Full Disclosure Principle? Definition, Example, Checklist

Definition: The full disclosure principle is the accounting principle that requires an entity to disclose all necessary information in its financial statements and other related signification. This is to ensure that the lack of information does not mislead the users of financial information. The idea behind the Full Disclosure Principle is that management might try not to …

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Consistency Principle (Definition and Example)

Definition: The consistency principle is the accounting principle that requires an entity to apply the same accounting methods, policies, and standards for preparing and reporting its financial statements. The main objective of the consistency principle is to avoid any intention from management using an inconsistent approach to manipulate the financial information to ensure their financial …

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Conservatism Principle: Definition | Example | Explanation

Definition: Conservatism principle is the accounting principle that concern about the reliability of Financial Statements of an entity. The conservatism principle provides guidance to accountants on how to records and recognizes the uncertainty outcome of revenues, expenses, assets, and liabilities in financial statements. This principle also intends to ensure that the users who use financial …

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