Accounting ConceptsAccounting ConceptsAppendix CAppendix C

Business EntityBusiness Entity

Business EntityBusiness Entity

Financial information is recorded and reported separately from the owner’s personal financial information.

Financial information is recorded and reported separately from the owner’s personal financial information.

Unit of MeasurementUnit of Measurement

Unit of MeasurementUnit of Measurement

Business transactions are stated in numbers that have common values—that is, using a common unit of measurement.

Business transactions are stated in numbers that have common values—that is, using a common unit of measurement.

Realization of RevenueRealization of Revenue

Realization of RevenueRealization of Revenue

Revenue is recorded at the time goods or services are sold.

Revenue is recorded at the time goods or services are sold.

Objective EvidenceObjective Evidence

Objective EvidenceObjective Evidence

A source document is prepared for each transaction.

A source document is prepared for each transaction.

Consistent ReportingConsistent Reporting

Consistent ReportingConsistent Reporting

The same accounting procedures are followed in the same way in each accounting period.

The same accounting procedures are followed in the same way in each accounting period.

Accounting Period CycleAccounting Period Cycle

Accounting Period CycleAccounting Period Cycle

Changes in financial information are reported for a specific period of time in the form of financial statements.

Changes in financial information are reported for a specific period of time in the form of financial statements.

Matching Expenses with Revenue

Matching Expenses with Revenue

Matching Expenses with Revenue

Matching Expenses with Revenue

Revenue from business activities and expenses associated with earning that revenue are recorded in the same accounting period.

Revenue from business activities and expenses associated with earning that revenue are recorded in the same accounting period.

Adequate DisclosureAdequate Disclosure

Adequate DisclosureAdequate Disclosure

Financial statements contain all information necessary to understand a business’s financial condition.

Financial statements contain all information necessary to understand a business’s financial condition.

Going ConcernGoing Concern

Going ConcernGoing Concern

Financial statements are prepared with the expectation that a business will remain in operation indefinitely.

Financial statements are prepared with the expectation that a business will remain in operation indefinitely.

Historical CostHistorical Cost

Historical CostHistorical Cost

The actual amount paid for merchandise or other items bought is recorded.

The actual amount paid for merchandise or other items bought is recorded.