PRINCIPLES OF ACCOUNTING

GROUP 5
SOWMYA N G
SUSHMA N
MANASA BL
SHARMILA N M
 Introduction to accounting principle

There are general rules and concepts that govern the field of accounting. Both the company’s
management and the independent accountants must clarify that the financial statements have been
prepared in accordance with GAAP

Accounting principles are rules and guidelines that companies must follow when reporting financial
data
TYPES OF ACCOUNTING PRINCIPLES

1. Accural principle
2. Conservatism principle
3. Consistency principle
4. Cost principle
5. Economic entity principle
6. Full disclosure principle
7. Going concern principle
8. Matching principle
 ACCURAL PRINCIPLE
To recognize revenue earned regardless of when it was collected, and to record expenses incurred whether
paid or not
This accounting practice is based on the basic principle of accural accounting.
CONSERVATISM PRINCIPLE
It is a concept in accounting under GAAP which recognizes and records expenses and liabilities-certain or
uncertain in nature, as soon as possible but recognizes revenues and assets when they are assured of being
received
 CONSISTENCY PRINCIPLE
The consistency principle states that,once you adopt an accounting principle or method, continue to follow it
consistently in future accounting periods. Only change an accounting principle or method if the new version in
some way improves reported financial result

COST PRINCIPLE
The cost principle is one of the basic underlying guidelines in accounting. It is also known as the historical cost
principle. The cost principle requires that assets be recorded at the cash amount (or the equivalent) at the time
that an asset is acquired.
ECONOMIC ENTITY PRINCIPLE
The economic entity principle is an accounting principle that states that a business entity’s finance should be
keep separate from those of the owner, partners,share holders, or related businesses.it is considered one of
the core, fundamental principle of accounting

FULL DISCLOSURE PRINCIPLE

The full disclosure principle is a concept that requires a business to report all necessary information about
they financial statements and other relevant information to any persons who are accustomed to reading this
information.
 GOING CONCERN PRINCIPLE
A going concern is a business that functions without the threat of liquidation for the foreseeable future,
which is usually regarded as atleast 12 months

MATCHING PRINCIPLE
In accural accounting, the revenue recognition principle states that expenses should be recorded during the
period in which they are incurred, regardless of when the transfer of cash occurs.