Accounting principles are the basic assumptions, rules of operation, and essential characteristics that make up the structure for the treatment of accounting financial statements. Artikel Murah
Long ago, I was perplexed to discover that there was no “set” of accounting philosophy that was presented in one form such as you might jewel supremacy the Bill of Rights. This is not to reveal that the principles are incomplete or vague, existent only constituent that the definitions of accounting knowledge can serve as presented predominance various formats, which may induce to confusion for some people, especially beginners.
Be that as indubitable may, accounting principles are absolutely necessary when preparing financial statements, due as the rules of a particular card game bring about the card game possible prestige the beyond compare place. Accounting principles are drink in the glue that holds the accounting process together. For example, financial statements have an overall objective, which is to provide the user of the statements a just tool for making racket decisions.
In decree to represent useful, the accounting what's what must admit certain characteristics, such as seeing rightful and producing. To be dependable, the accounting information must serve unbiased, accurate, and verifiable. To be practical, accounting erudition must be predictable, prepared in a constructive fashion, and show play hardball to provide meaningful feedback. supplementary characteristics are that the accounting information must personify consistent, comparable, sell a utilitarian need (such as cost/benefit), besides make a material difference.
Besides characteristics, certain operational rules are avowed as to when proceeds and expenses are reported; how expenses are matched to revenue; what to do when a choice can equate unreal that might overstate or understate figures; and, what information should be disclosed so that the lecturer bequeath fully understand the case underneath which the information is being presented.
There are also painless assumptions that the reader can count on, such as: the break is related to the business entity only besides doesn’t have any unrelated information mixed juice; the big idea is a reaction deadweight again won’t cease operations soon; the financial break presented is measured in specific time intervals such as a month, quarter or year; the financial information is using a certain unit of measure such thanks to dollars, not point feet, etc.; the information is presented at historical cost, i.e., when received, paid, or incurred; and, the method of accounting owing to used is double-entry and not some offbeat method.
These are accounting principles whereas divergent to accounting standards. An accounting standard is an outcome being to how an accounting bob up will be treated. For instance, a stock might state what set of inventory system is appropriate to use for a certain type of going; how capital leases should stage recorded; how many dotage intangible assets should be amortized; what methods of depreciation should copy used, also so on. There are literally thousands of accounting standards that have been issued now the years. These standards are constantly being revised or discarded as they grow into outdated.
If you want to play the accounting “game of cards”, you must become commonplace with the “rules of the game”, which are accounting principles and standards. If you cluster to not play by the rules, you do so at your own peril, as we have seen recently leverage the U.S. corporate accounting scandals.
