BASIC ACOOUNTING 8

1. ENTITY CONCEPT-states that the transactions associated with a business

must be separately recorded from those of its owners or other businesses.
2. GOING CONCERN CONCEPT-is a fundamental principle of accounting. It
assumes that during and beyond the next fiscal period a company will complete
its current plans, use its existing assets and continue to meet its financial
obligations.
3. TIME PERIOD OR RERIODICITY CONCEPT-The activity within the scope of
an accounting period that must be recorded within the time period on a financial
statement.
4. MONETARY CONCEPT-means that only transactions and events that are
capable of being measured in monetary terms are recognized in the financial
statements.
5. COST CONCEPT-is one of the basic underlying guidelines in accounting. It is
also known as the historical cost principle. The cost principle requires that
assets be recorded at the cash amount (or the equivalent) at the time that an
asset is acquired.
6. ACCRUAL CONCEPT-is one of the basic underlying guidelines in accounting.
It is also known as the historical cost principle. The cost principle requires that
assets be recorded at the cash amount (or the equivalent) at the time that an
asset is acquired.
7. REVENUE CONCEPT- are recognized when earned, and expenses are
recognized when assets are consumed.
8. MATCHING CONCEPT-is an accounting practice whereby firms recognize
revenues and their related expenses in the same accounting period. The
purpose of the matching concept is to avoid misstating earnings for a period.
9. VERIFIABILITY CONCEPT-results are verifiable when they're reproducible, so
that, given the same data and assumptions, an independent accountant can
produce the same result the company did.
10. MATERIALITY CONCEPT- also called the materiality constraint, states
that financial information is material to the financial statements if it would
change the opinion or view of a reasonable person
11. DISCLOSURE CONCEPT-is an accounting principle that requires
management to report all relevant information about the company's operations
to creditors and investors in the financial statements and footnotes.
12. CONSISTENCY CONCEPT- means that accounting methods once
adopted must be applied consistently in future

THREE BASIC PURPOSES OF BASIC ACCOUNTING

<helps increase the confidence of financial statement users, that the financial
statements are presentationally faithful.

<Provide companies and accountants who prepare financial statement with

guidance on how to account for are report economic activities

<Provide independent auditors of financial statements with basis for evaluating

fairness and completeness of those statements.