Accounting Principle

Business Entity Concept or Principle: Definition | Example | Explanation

The business entity concept or business entity principle considers the owner of an entity has different legal liabilities from the entity’s obligations. Under this concept, the entity must records all transactions separately from that transaction that belongs to its owner. If it is recording, the substance of the transactions or balance should clearly be defined. …

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13 Top Accounting Principles ( Books, Definition, and Examples)

Definition: Accounting principles are the principle, concept, basic, guidance, as well as the rule that use by the accountant to prepare the financial statements of an entity. They are also used by the standard-setting body to develop accounting standards and frameworks. You may find out some of the accounting principles have been set out in …

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Matching Principle (With 4 Examples): Definition, Using, and Explanation

Definition: The matching principle is one of the accounting principles that require, as its name, the matching between revenues and their related expenses. The expenses correlated with revenues should be recognized in the same period in the financial statements. This concept tries to ensure that there are no over or under revenue or expenses records …

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Revenue Recognition Principle (IFRS): Definition, Using, Formula, Example, Explanation

Definition: The Revenue Recognition Principle is the concept of how the revenue should be recognized in the entity’s Financial Statements. Revenue Recognition could be different from one accounting principle to another principle and one standard to another standard. For example, based on a cash basis or cash accounting principle, revenue is recognized in the Financial …

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Accrual Basis in Accounting: Definition, Example, Explanation

Accrual Basis: The Accrual basis is the accounting principle that use to recognize and record accounting transactions or events in the financial statements regardless of its cash flow. Under the accrual basis, expenses are recognized and recorded in the Financial Statements at the periods they are incurred rather than at the period they are paid. …

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What is Going Concerned? Definition, Assessment, Indicators, Example, Disclosure

Definition: In accounting, going concerned is the concept that the entity’s Financial Statements are prepared based on the assumption that the entity operation is still operating normally in the next foreseeable period. This foreseeable period normally has twelve months from the ending period of Financial Statements. In order to assume that the entity has no …

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What is a Periodicity Assumption? Definition, Advantage, and Example

Definition: Periodicity assumption is the accounting concept used to prepare and present Financial Statements into the artificial period of time required by internal management, shareholders, or investors. What does an artificial period mean? Well, most of the financial statements are prepared based on fiscal years. Sometimes, based on tax years for the tax purpose or …

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What Is the Historical Cost Principle (Definition and Example)

Definition: The concept of the historical cost principle is that the assets are recorded based on the price at the time they are purchased, and the liabilities are recorded based on the values expected to pay at the original value rather than market value or inflation-adjusted value. The Historical cost accounting principles are used mainly …

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