Accounting Principles

Accounting is governed by some principles so that the information provided to those interested in the company has a basis for comparison, thus transmitting a very real picture of the evolutions or developments of the commercial activity.

Principle of continuity

As in the creation of a company, Accounting also assumes the performance of activities with unlimited duration, that is, the company will exist forever, having no intention of liquidating itself in the future.

Principle of consistency

The company must not change its accounting policies, namely and by way of example, the company must choose the inventory system to be used in its activity and will not change it every year or year.

Principle of specialization

Income and costs must be recorded when earned or incurred, received or paid: accruals and deferrals.

Historical cost principle

The acquisition or production costs must be recorded in nominal currency units.

Principle of prudence

The company must be aware and concerned about possible returns and repairs of the products sold, and reflect this in its accounts.

Principle of the substance in the form

The company must register all movements, whether legal or not.

Principle of materiality

The financial statements must reflect exactly all the relevant elements, so that the assessments and decisions are as accurate as possible.

Leave a Comment