Monday, February 28, 2011

Basic Assumptions Principles and Constraints

There are three main Accounting Assumptions that accountants should be comfortable with:

Monetary unit assumption – In accounting, money is the commonly exchanged and transactions should be expressed in monetary units.

Time period assumption – Events of a company can be divided into time periods. Information reports should be generated for different time periods.

Business entity assumption – a business is accounted for separately and apart from other entities.  Most business entities will take distinct forms.

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