ACCOUNTING PRINCIPLES

Business Enti ty principles• According to the business entity

principles, business is considered to be separate and distinct from its owner. Business transactions, therefore, are recorded in the book of accounts from the business point of view and not owner.

Money measurement principle

• According to the money measurement principles, transactions and events that can be measured in money terms are recorded in the book of accounts of the enterprise. In other words, money is the common denominator in recording and reporting all transactions.

Accounting period principle

• According to the accounting period principles, the life of an enterprise is broken into smaller periods so that its performance is measured at regular intervals.

• According to the full disclosure principles, “there should be complete and understandable reporting on the financial statements of all significant information relating to the economic affairs of the entity.”

• The materiality principles refers to the relative importance of an item or an events.

• According to the American Accounting Associations, “an item influence the decisions of an informed investor.”

• According to the matching concept, cost incurred to earn revenue is recognized as expenses in the period when related revenue is recognized as earned.

Matching concept or matching principles

Gautam bawtaXI