Ch 1 · Theoretical Framework

📘 Core concepts

1. 1Accounting: process of identifying, measuring, recording and communicating financial info.
2. 2Going concern: entity will continue for the foreseeable future (typically 12 months).
3. 3Accrual basis: revenue/expenses recorded when earned/incurred, not when cash flows.
4. 4Consistency: same accounting policies applied period to period unless change is justified.
5. 5Prudence: anticipate no profit, but provide for all probable losses.
6. 6Materiality: items significant enough to influence decisions must be disclosed.