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Principles
Principles for TCA 221
11
Accounting
Undergraduate 2
02/04/2016

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Term
Business Entity Principle
Definition
An accounting principle that requires that a business maintain its own set of records and accounts that are separate from other financial interests of its owners.
Term
Conservatism Principle
Definition

An accounting principle that requires accounting procedues that recognize expenses as soon as possible, but delay that recognition of revenues until they are ensured. 

Example, nonrefundable deposits for future services should be recognized as liabilities until the service is actually perfomed.

Term
Consistency principle
Definition
An accounting principle that requires that once an accounting method has been adopted, it should be followed from period to period in the future unless a change in accounting methods is warranted and disclosed.
Term
continuity of the business unit principle
Definition
The assumption in preparing the accounting records and reports that the business will continue indefinitely and that liquidation is not a prospect-in other words, that the business is a going concern.
Term
Cost Principle
Definition
An accounting principle that requires recording the value of transactions for accounting purposes at the actual transaction price (cost)
Term
Full disclosure principle
Definition
An accounting principle that requires that a business's financial statements provide information on all the significant facts that have a bearing on their interpretation. Types of disclousers include the accounting method used, changes in the accounting methods, contingentliabilities, events occuring subsequent to the financial statement date, and unusual and nonrecurring items.
Term
Going concern principle
Definition
An accounting principle that requires the preparation of accounting records and reports under the assumption that the business will continue indefinitely and that liquidation is not a prospect
Term
Matching Principle
Definition
An accounting principle that requires that expenses and revenues be matched to the period in which they were incurred or earned regardless of when they are actually realized
Term
Materiality principle
Definition

An accounting principle that states that only items that are 'material' or that 'make a difference' should be presented in financial statements.

 

Term
Objective evidence principle
Definition
An accounting priciple that states that all accounting transactions and the resulting accounting records should be based on objectively determined evidence to the greatest extent possible
Term
Unit of Measurement principle
Definition
The accounting principle that requires financial datat to be recorded with a common unit of measure. In the United States that common unit is the dollar.
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