Accounting principles

By acctg.human

These are global standards that are followed by accountants worldwide. These globally similar principles of accounting include the following:
The entity principle
This principle states that a business is separate from the owner. A company is regarded by law as a ‘person’ that can sue and be sued. It can also own property and enter into legal contracts.
The going concern principle
This suggests that a business is assumed that it will continue with its normal operations in the unforeseeable future. In most cases, the unforeseeable future is a period of more than 12 months. There are certain implications of a business not being a going concern. For example, if a business is not a going concern, its long term assets and liabilities are regarded as short term.
Prudence or the conservative concept
This simply implies that assets should not be overstated and losses should not be understated.
Materiality concept
This seeks to establish the material value of an asset. An asset is considered to be material if its inclusion or exclusion in the book of accounts can affect decision making.
Periodicity
This principle means that the book of accounts should be prepared for a predetermined period of time. For most companies, the books are prepared annually. Smaller businesses may prepare their books of accounts semi-annually.
Matching concept or matching principle
This means that the revenues of a certain period should be matched with the corresponding expenses of that particular period.
Consistency concept
This principle means that if a firm used a certain method to record its book of accounts, then that company should consistently use that particular method. For example if a company uses the straight line method of depreciation, then that method should be consistently followed.
There is a plethora of information on the web regarding accounting principles. They have a good resources section and are helpful for both small businesses looking for a qualified certified public accountant AND CPAs looking for help with marketing. Their research service is free for small businesses looking for help with their accounting. The IRS website is also helpful but a little more technical.

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About The Author
Freelance writer covering mostly topics on bookkeeping, accounting, and some aspects of small business marketing. I search out good sites regarding these topics and like to share information when I find it useful. I am particularly interested in information of use to certified public accountants (CPAs)