SEARCH, INDEX, UPDATES, CONTENTS, UNDERSTANDING, FUNDAMENTAL CONCEPTS
Going concern, Accruals, Consistency, and Prudence are the broad basic assumptions for all Accounts.
GOING CONCERN - the business will continue for the foreseeable future, in particular potential liabilities which would arise if the business ceased are not included.
ACCRUALS - revenue and costs are recognised as they are earned or incurred, not as money is received or paid. This is also known as the matching principle, costs are matched with revenue in the same period.
CONSISTENCY - like items are treated in the same manner from one accounting period to the next.
PRUDENCE - revenue and profits are not anticipated but are included when the ultimate cash value can be assessed with reasonable certainty. By contrast expenses are included as a best estimate if actual costs are not known.
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