Key Accounting Concepts

• Revenue Recognition

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  Recognize revenue when earned and realizable; not necessarily when cash is received.
  Under ASC 606/IFRS 15 recognize revenue when performance obligations are satisfied.
• Matching (Expense Recognition)

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  Recognize expenses in the same period as related revenues.
• Cost Principle

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  Record assets at historical cost, not current fair value (unless revaluation rules apply).
• Materiality

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  Allow simplifications for immaterial items without misleading users.
• Conservatism

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  When in doubt, avoid overstating assets/income or understating liabilities/expenses.
• Going Concern

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  Assume the entity will continue operating for the foreseeable future.
• Consistency

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  Apply methods consistently across periods unless a justified change occurs.
• Separate Entity

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  Keep business records separate from owners and other entities.
• Time Period

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  Business life is divided into artificial periods for reporting.
• Monetary Unit

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  Stable currency used as the measurement unit.