Briefly discuss about the Basic accounting principles
Posted by Ripon Abu Hasnat on Thursday, May 29, 2014 | 0 comments
There are five basic accounting principles. These are
outlined below:
1. Principle of double entry—each transaction is entered twice in the books of accounts.
For every debit there must be a corresponding credit.
2. Principle of recording—all accounting entries emanate from
a source document. This is the authority for entry into journals (and to the
general and subsidiary ledgers).
3. Principle of profit determination—the life of a business is divided into time periods.
Revenue and expenses from those periods can be matched to determine whether a
profit or loss has been obtained.
4. Principle of reporting—accounting information is to be
conveyed to a person without accounting knowledge in a clear, logical and
understandable form. Examples are the Revenue Statement and the Balance Sheet.
5. Principle of control—accountants and bookkeepers must be
constantly alert to ensure that the accounting practices minimize the chances
of error and fraud.
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