6 A Flashcards
What are the six main accounting principles?
Accounting Entity, Accounting Period, Materiality, Monetary, Going Concern, Historical Cost.
What is the Accounting Entity principle?
It treats the business as separate from its owners, so business transactions are distinct from personal transactions.
What is the Accounting Period principle?
Financial reporting is done within a set time frame, not exceeding a year, and the reporting frequency must remain consistent.
What is the Materiality principle?
t ensures that information is included in financial reports if its omission or misstatement would affect user decisions.
What is the Monetary principle?
All items in financial records must be assigned a monetary value, displayed in AUD.
What is the Going Concern principle?
Assumes the business will continue operating, so assets are recorded as if the business is ongoing. If closing, assets show liquidation value.
What is the Historical Cost principle?
Business transactions are recorded at the original cost at the time they occurred, reflecting their value at that time.
