Back to School Offer

Get 20% of Your First Order amount back in Reward Credits!

Get 20% of Your First Orderback in Rewards

All papers examples
Get a Free E-Book! ($50 Value)
HIRE A WRITER!
Paper Types
Disciplines
Get a Free E-Book! ($50 Value)

Accounting Assumptions, Principles, and Constraints Checkpoint, Essay Example

Pages: 1

Words: 328

Essay

Accounting is an art of recording, classifying and summarizing in a systematic manner, in monetary terms, transactions, or events that are financial in nature.

Assumptions of accounting.

The accounting entity.

It assumes that a business is a separate entity from its owners and any other business around it. Revenue collections from the business should therefore, be separate from other personal expenses.

Going concern.

It assumes that the business will be in existence for an indefinite time. This assumption will lose its validity if there exists assurance of liquidation of the business.

Principle of Monetary unit.

It assumes that accountants will keep their records using a specific, stable currency. In the United States, the standard unit of recording financial transactions is an adjusted dollar.

Time-period principle.

It assumes that we can classify economic activities of a particular enterprise into time periods, for example, annually (Bragg, 2011).

Accounting principles.

Historical cost principle.

It requires that companies should account and make reports basing on the purchasing costs, and not the present fair market values.

Accrual concept.

It requires that one should record revenue once a transaction is complete, and not when they receive cash

Matching principle.

It requires that one has to match expenses with their respective revenues. This principle allows for better evaluation of profitability of the firm (Bragg, 2011).

Accounting Constraints.

Objectivity principle.

The constraint requires that we provide all financial statements basing on specific objective evidence.

Materiality principle.

We consider an item significant once we obtain a report. This means that it should affect the decision of a reasonable individual.

Consistency principle.

It requires that the company maintain the same accounting principles in its recording and reporting every financial year (Walton, 2009).

In conclusion, putting into consideration all the above principles, constraints, and assumptions make accounting records more valid and easy to analyze. Thus, a sound financial reporting system should consider most of the above issues.

 

References

Bragg, S. M. (2011). Wiley GAAP 2012: Interpretation and Application of Generally Accepted

Accounting Principles. New York: John Wiley & Sons.

Walton, P. (2009). An Executive’s Guide for Moving from US GAAP to IFRS. New York:

Business Expert Press.

Time is precious

Time is precious

don’t waste it!

Get instant essay
writing help!
Get instant essay writing help!
Plagiarism-free guarantee

Plagiarism-free
guarantee

Privacy guarantee

Privacy
guarantee

Secure checkout

Secure
checkout

Money back guarantee

Money back
guarantee

Related Essay Samples & Examples

Samples, Power Analysis, and Design Sensitivity Samples, Power Analysis, and Design Sensitivity, Essay Example

Compare and contrast internal and external validity. Describe and give examples of research questions for which external validity is a primary concern. Describe and give [...]

Pages: 5

Words: 1457

Essay

Business Responses, Essay Example

Idealized Attributes From the average above, I found out that the leader sometimes posses idealized attribute’s form of transformational leadership. This means that followers do [...]

Pages: 2

Words: 460

Essay

Types of Power, Essay Example

The videos taught me that there is not only one type of power but five types of powers which are referent power, reward power, legitimate [...]

Pages: 2

Words: 602

Essay

Criminal Justice: Juveniles, Essay Example

Juveniles are treated differently as compared to adult criminals. This is because most juveniles engage in petty cases and are not fully matured as to [...]

Pages: 3

Words: 769

Essay

Harris/Jardines Questions, Essay Example

Part One The issue of law considered by Kagan in this case is whether or not a drug detection dog’s alert during a traffic stop [...]

Pages: 3

Words: 772

Essay

Management Week 1 Assignment 3, Essay Example

We would like to own a Bed and Breakfast in the hill country outside of Austin, overlooking the beautiful Lake Austin.  It would be a [...]

Pages: 2

Words: 485

Essay

Samples, Power Analysis, and Design Sensitivity Samples, Power Analysis, and Design Sensitivity, Essay Example

Compare and contrast internal and external validity. Describe and give examples of research questions for which external validity is a primary concern. Describe and give [...]

Pages: 5

Words: 1457

Essay

Business Responses, Essay Example

Idealized Attributes From the average above, I found out that the leader sometimes posses idealized attribute’s form of transformational leadership. This means that followers do [...]

Pages: 2

Words: 460

Essay

Types of Power, Essay Example

The videos taught me that there is not only one type of power but five types of powers which are referent power, reward power, legitimate [...]

Pages: 2

Words: 602

Essay

Criminal Justice: Juveniles, Essay Example

Juveniles are treated differently as compared to adult criminals. This is because most juveniles engage in petty cases and are not fully matured as to [...]

Pages: 3

Words: 769

Essay

Harris/Jardines Questions, Essay Example

Part One The issue of law considered by Kagan in this case is whether or not a drug detection dog’s alert during a traffic stop [...]

Pages: 3

Words: 772

Essay

Management Week 1 Assignment 3, Essay Example

We would like to own a Bed and Breakfast in the hill country outside of Austin, overlooking the beautiful Lake Austin.  It would be a [...]

Pages: 2

Words: 485

Essay

Get a Free E-Book ($50 in value)

Get a Free E-Book

How To Write The Best Essay Ever!

How To Write The Best Essay Ever!