Principles of Accounting Flashcards
What are the principles of accounting? (Two main branches)
Financial accounting (assets and profits) and managerial accounting (internal records for business performance)
What is meant by consistency?
Accounts produced in the same way
What is meant by going concern?
Operating as normal
What is meant by matching?
Dates used to record financial transactions are when transactions take place not when payment is made
What is meant by materiality?
The value of business needs to be a realistic figure not calculating every asset
What is meant by objectivity?
Setting realistic prices
What is meant by prudence?
Do not overstate values
What is meant by realisation?
Things appear when transactions are made not payment made
What is meant by Generally Accepted Accountancy Practice (GAAP) ?
Framework for accountancy rules
State 5 factors which influence choice of source
Time, legal structure, quantities factors, qualities factors, external influences
