Foundational Principle Definitions Flashcards
Monetary unit assumption
Business transactions should only be recorded if they can be expressed in terms of a currency
Full disclosure principle
You must disclosure all relevant information
Historic cost
The value of an asset is recorded at its original price on the balance sheet
Matching
Expense should be reported in the same period in which the corresponding revenue is earned
Going concern
Assumption the business will continue to operate in the foreseeable future
Fair value
Measuring a businesses liabilities and assets at their current market value
Revenue recognition & realization
a companies revenues are recognized when the service or product is delivered not when cash is received
Economic entity & control
Separates the transaction by the business from it’s owner
Periodicity
Reports financial results within certain designated periods of time
