Accounting principles professional#

The accounting information obtained should not be influenced by the personal bias or judgment of the statement makers. In other words only those accounting rules which increase the utility of the business records to its readers will be accepted as an accounting principle by them. the use of it should result in information that is meaningful and useful to the financial statement users. RelevanceĪn accounting principle should be relevant, i.e. The general acceptance of an accounting principle or practice depends on its capacity to meet the criteria of relevance, objectivity, and feasibility. The practice of recording and reporting may thus differ from company to company.

They recognize that there are a number of ways in which one thing can be done.Īn accountant has considerable latitude and choice within the generally accepted accounting principles in which to express his own idea as to the best way of recording and reporting is specified account. The accounting principles do not prescribe one way of doing things. These are constantly influenced by changes in the legal, social and economic environment as well as the needs of the users However, the principles of accounting are not static in nature.

Accounting principles professional#

This brings in objectivity in the process of recording and makes the accounting statements more acceptable to various users.Īccounting Principles have evolved over a long period of time on the basis of past experiences, usages or customs, statements by individuals and professional bodies and regulations by government agencies, and have general acceptability among most accounting professionals. Accounting Principles are the rules or guidelines adopted for recording and reporting of business transactions, in order to bring uniformity in the preparation and the presentation of financial statements.įor example, one of the important rules is to record all transactions on the basis of historical cost, which is verifiable from the documents such as cash receipt for the money paid.