obligations and doesn’t plan or

Accounting Concepts and won’t need to liquidate in the

Principles coming year.

Generally Accepted Accounting Time period Assumption

Principles - the assumption that the indefinite
 are uniform set of accounting life of a company can be divided
into multiple time periods with
rules, procedures, practices and
equal lengths.
standards that are followed in
preparing the financial - The result of this is the periodic
statements. presentation of a company’s
financial statements.
Accrual Accounting Purpose: Provision of segments
in the life of the businesses to
- an accounting basis wherein:
assess its performance and its
 revenue should be recognized
current state
when earned regardless of
collection; and Accounting Entity Assumption/Separate
 expenses should be recognized Entity/ Business Entity principle
when incurred regardless of
- the assumption that the business
payment.
is an entity separate and distinct
Purpose: Recognition of
from the owners.
economic events are based on
Purpose: Separation of records of
their occurrence.
a specific business operation
Matching Principle from personal accounts of the
owner to provide a more precise
- Expenses should be recorded in
picture of the company’s
the same period as the related operations.
revenues.
- Cost should be matched with the
revenue generated.
Monetary Unit Principle
- amounts are stated into a single
monetary unit
Going Concern Assumption
- The assumption that the entity
will continue operations
indefinitely into the future or at
least the next 12 months
- It assumes that the business can
generate income, meet its