Accounting Terms

Front 1

Revenue should only be recognised when it is capable of objective measurement and when the cash realisation of the sale is reasonably certain;

Back 1

Realisation

Front 2

Accounting should be consistent across periods to allow comparability

Back 2

Consistency

Front 3

Every transaction affects the financial statements in 2 ways

Back 3

Duality

Front 4

Business should be treated and accounted for as if it will continue into the foreseeable future.

Back 4

Going concern

Front 5

Assets & Liabilities value based on their original cost. As opposed to up to date, 'fair value/current value'

Back 5

Historic Cost

Front 6

All the income/expenses associated with a particular period are recognised in the period in which they arise rather than the period in which cash is received or paid. E.g. Unsold inventory carried forward as a cost to match against revenue from the sale of that inventory in a later period.

Back 6

Accruals/Matching

Front 7

Only items which are significant are to be accounted for separately.

Back 7

Materiality

Front 8

Items in financial statements are described in terms of money only

Back 8

Money measurement

Front 9

Need for financial statements every so often, usually atleast once per year, even though somewhat artificial

Back 9

Periodicity

Front 10

Profits should be recognised when they have been realised, but losses should be recognised fully when they are likely - i.e. The burden of proof of income is greater than that requires for recognising an expense or a loss

Back 10

Prudence

Front 11

Separate Business from Owner

Back 11

Business entity