The accounting concepts are as follows:

  1. Accruals – revenue and expenses are recorded when they occur and not when the cash is received or paid out
  2. Consistency – once an accounting method has been chosen, that method should be used unless there is a sound reason to do otherwise
  3. Going concern – the business entity for which accounts are being prepared is in good condition and will continue to be in business in the foreseeable future
  4. Prudence – revenue and profits are included in the statement of financial position only when they are realized but liabilities are included when there is reasonable ‘possibility’ of incurring them
  5. Cost – asset value recorded in the account books should be the actual cost paid, and not the asset’s current market value
  6. Business Entity – accounting records reflect the financial activities of a specific business or organization, not of its owners or employees
  7. Matching – transactions affecting both revenues and expenses should be recognized in the same accounting period
  8. Materiality – minor events may be ignored, but the major ones should be fully disclosed
  9. Money measurement – the accounting process records only activities that can be expressed in monetary terms
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