Accounting Principles

What Are Accounting Principles?

Accounting principles are standardized guidelines that govern how financial statements are prepared and reported. They ensure consistency, reliability, and comparability of financial information.

Key Takeaways

  • Definition: Rules and guidelines for financial reporting. 
  • Purpose: To ensure accurate and consistent financial statements. 
  • Examples: GAAP (Generally Accepted Accounting Principles), IFRS (International Financial Reporting Standards).

Common Accounting Principles

  1. Revenue Recognition Principle: Revenue is recognized when earned. 
  2. Expense Recognition Principle: Expenses are recognized when incurred. 
  3. Historical Cost Principle: Assets are recorded at their original cost. 
  4. Full Disclosure Principle: All relevant information should be disclosed in financial statements.

Importance of Accounting Principles

Adhering to accounting principles ensures transparency, builds trust with stakeholders, and enhances the reliability of financial statements.


About Us

Discover our unwavering dedication to revolutionizing businesses with bespoke financial solutions.