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Saturday, October 9, 2010

Four Underlying Principles In Accounting:

1. Historical Cost: Financial statements report companies’ resources
and obligations at an initial historical cost. This conservative measure precludes
constant appraisal and revaluation.

2. Revenue Recognition:
Revenues must be recorded when earned and
measurable.

3. Matching Principle: Costs of a product must be recorded during the
same period as revenue from selling it.

4. Disclosure: Companies must reveal all relevant economic
information determined to make a difference to
their users.

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