Assumptions and accounting principles

Assumptions and accounting principles




Accounting assumptions



Adoption of financial accounting on five basic assumptions are:

1. Assuming the unit of accounting: This means the assumption that the project's independent judicial personality and recording financial transactions in the books were mainly associated with these personal, independent, even if possessed by different people or multiple. Based on this assumption the accountant to conduct operations accounting for this project as a separate unit and not the owners of this project is multiplied or Gulwa.

2. Continuity assumption: This means the assumption that the facility and found to continue in the exercise of its ordinary indefinite period of time. This means that revolve balances the current year to the next year ((eg balances customers)).

3. Assuming the unit of measurement: This means the assumption and the existence of a unit of measurement common link between the various processes and activities at the facility and allow for calculations and comparisons. Accounting based on a national currency basis to measure the value of the various events of interest to the accountant.

4. Assumption of the accounting period: returned are limited to one calendar year beginning on 1 / 1 of each year and end on 31/12 for the same year and is measured in profit and financial position as at the end of the accounting or at the end of the year.

5. Assuming the balance accounting: This means the assumption that all the accounting operations launched from a perfect balance between the parties to the constraint accounting party to the debtor and the creditor making the algebraic sum of any accounting entry is equal to zero and must be balanced the budget and the balance of audit and help this purpose, the possibility of detection errors caused by lack of balance.





Accounting principles



1 - the historical cost basis: The historical cost of any out of a purchase plus all expenses paid so that the parent is ready for use.

2 - the principle of Revenue: Revenues realized at sale and are measured in monetary terms and that the production that was not sold during the accounting period is the historical cost price evaluation for the purposes of calculating profit.

3 - the principle of interview expenses income: and this principle is to link the revenue expenditure to be made accessible to the average net profit.