Basic principle of accounting

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Accepted Answer

Basic principle of accounting is the concept of double-entry accounting, where every transaction has equal and opposite effects on two or more accounts.

Double-entry accounting: Every transaction affects at least two accounts, with one account debited and another credited.
Consistency: Accounting methods and principles should be consistently applied to ensure accurate financial reporting.
Accrual basis: Revenues and expenses are recognized when earned or incurred, not necessarily when cash is exchanged.
Matching principle: Expenses should be matched with the revenues they helped generate in the same accounting period.
Going concern: Financial statements are prepared with the assumption that the business will continue operating indefinitely.
Materiality: Only significant transactions and events should be reported in financial statements.
Conservatism: When in doubt, accountants should choose the option that is least likely to overstate assets or income.
Cost principle: Assets should be recorded at their historical cost, not their current market value.

Basic principle of accounting

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