Accounting Rules

An accounting transaction should only be recorded if it can be expressed in terms of money

• Inventory valudation

• Business entity

• Money measurement

• Capital Expenditure

A business is treated as being completely separate from the owner of the business.

• Realisation

• Historical Cost Prinicple

• Accrual Principle

• Business entity principle

Every transaction has  aspects - a giving and receiving. 

• Materiality

• Duality principle

• Going concern

• Accounting period

The profit is only regarded as being earned  when the legal title of goods or service passes from the seller to the buyer, who has then an obligation to pay for the goods.

• Consistency

• Realisation

• Prudence

• Relevance

Once method has been selected , the method must be used consistently from one accounting period to the next.

• Prudence principle

• Comparability

• Understandability

• Consistency principle

Also referred to as matching principle. The revenue of the accounting period is matched against the cost of the same period. The timing of the accrual receipts and payments is ignored.

• Accrual Principle

• Revenue receipt

• Going concern principle

• Capital receipts

Known a conservatism.

Ensures that accounting records present a realistic picture of the position of the business. Never anticipate profit, but provide for all possible losses.

• Accrual principle

• Prudence principle

• Materiality

• Historical costs

it is assumed that the business will continue to operate for an indefinite period of time and that there is no intention to close down for the business or reduce the size of the business by any significant amount.

• Going concern

• Business entity

• Money measurement

• Realisation

applies to items of very low value which are not worth recording as separate items.

• Accounting period

• Materiality

• Reliability

Information can be used to confirm, correct prior expectations about past events and also help forming, reversing or confirming expectations about the future.

• Comparability

• Understandability

• Historical costs

• Relevance