ACCOUNTING 7 Chapter Notes - Chapter 2: Cash Flow Statement, Financial Statement, Accrual
Document Summary
Accounting is the process of recording, classifying, and summarizing financial transactions to provide information that is useful in making business decisions. The principles of accounting are the fundamental guidelines that govern the preparation and presentation of financial statements. These principles include the following: the going concern principle: this principle assumes that a business will continue to operate in the future. This allows for the comparison of financial statements from different periods and provides a more accurate picture of a company"s financial health: the cost principle: this principle requires that a company record assets at their cost. This means that the company should record the purchase price of an asset, rather than its market value. This principle is important because it ensures that the financial statements accurately reflect the cost of a company"s assets: the full disclosure principle: this principle requires that a company disclose all relevant information in its financial statements.
