What Are Accounting Principles?
Accounting principles are the standardized rules and guidelines that form the foundation of financial reporting. They ensure consistency, accuracy, and fairness in how financial data is recorded and presented.
Key Principles Every Professional Should Know
- Accrual Principle: Record income and expenses when they occur, not when cash is exchanged.
- Consistency Principle: Follow the same accounting methods consistently over time.
- Conservatism Principle: Report potential losses immediately, but gains only when realized.
- Materiality Principle: Disclose all information that could influence decisions of stakeholders.
Common Mistakes to Avoid
- Using outdated accounting methods
- Ignoring compliance requirements
- Overlooking proper documentation
