Principles of Accounting


In modern conditions in the accounting of enterprisesaccounting principles are applied, which are applied in international practice. All these principles are used to solve practical problems of modern management. Conditionally they can be divided into two groups.

The first group is the basic principles of accounting, which require certain conditions and do not change. They are also called assumptions:

  • Principle of property isolation.

The balance of the enterprise takes into account only its own property, which is separate from property belonging to employees of the organization and other enterprises.

  • The principle of continuous activity.

It says that the enterprise will continueits activities, which is important for creditors, who can be calm for repaying obligations in the future. As the enterprise is not going to reduce or liquidate its own activity.

  • The content prevails over the form. Very important information about the economic operation from an economic point of view.
  • Consistency.

The balances on synthetic and analytical accounts on the first day of the month are identical.

The second group presents the main principles of accounting, which are called requirements:

  • Principle of completeness, objectivity

When all business transactions will be reflected in the accounting at all stages and are confirmed by the primary documents.

  • The principle of prudence.

In which more attention is paid to costs,losses and liabilities, than incomes and assets, do not give an opportunity at calculations to overstate assets and incomes, to understate expenses and obligations and do not suppose creation of the latent reserve.

  • The principle of consistency.

In this case, the accounting policy of the enterprise is applied consistently from one reporting period to another, which allows obtaining comparable reports.

Sometimes the principles of accounting clearlyshow that it is always necessary to be flexible and account for the data provided by the accounting department. For example, the principle of timely provision of information increases its reliability and reliability with delay, although it makes it simply inappropriate in this case. When concluding contracts and contracts, it is more important to have timely expected data and calculations for profit than to provide all the accounting information for the period, but with a long delay.

  • The principle of charging.

When an economic transaction refers tothe accounting period in which it occurred, regardless of payment or receipt of money for this transaction. For example, income is reflected in the period when the goods arrived, and not when the payment was made. The principle of conformity is also taken into account here, in which revenues are related to expenses in the period when they are received on the basis of these expenses. But incomes and expenses of different reporting periods are taken into account separately.

  • The principle of double recording

All business transactions are reflected in the accounting by the principle of double entry, that is, the same amounts are written down on the debit and on the credit of the accounts.

  • Principle of periodicity.

Provides balance sheet and financial result for the reporting period: month, quarter, year.

Almost all organizations of the country apply the following accounting principles in their daily practice, regardless of their activities:

  1. The principle of monetary measurement, when the unit of measurement takes the currency of their country.
  2. The principle of confidentiality, in which material and criminal liability is provided for the disclosure of the trade secrets of the organization.
  3. Principles of clarity and significance should help users in their work when making decisions.
  4. The principle of truthfulness and impartiality gives a real idea of ​​the financial situation of the organization.

All these principles of the organization of accounting of both individuals and legal entities contribute to profit and do not contradict the legislation of the country.

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