Accounting Concepts and Principles

Going Concern Concept

refers the the presumption that the entity will continue to operate in the future--that it is not liquidated

Cost Principle

refers to the fact that transactions are recorded at their original (historical) cost to the entity as measured in dollars

Matching Concept

all expenses incurred to generate that period's revenues should be recorded in the same period as the related revenues. This results in an accurate measure of net income or net loss of the period.

Unit of Measurement

only transactions denominated in dollars are recorded in the account records

Objectivity

refers to accounts' desire to have a given transaction recorded that same way in all situations

Accounting Entity

the entity for which the financial statements are being prepared. Can be a proprietorship, partnership, corporation, or even a group of corporations. Can be separately identified and accounted for

Accounting Period

the period of time selected for reporting results of operation and changes in financial position (usually 1 year)