Fundamental Accounting Principles and Asset Valuation
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Fundamental Accounting Principles
- Basis: The van should be evaluated by its purchase price as it has been purchased for use and not for sale.
- Accrual: November 1, 20XX [2,400 / 12 = 200] [200 x 2 = 400]. For November and December: 200 + 200.
- Uniformity: To change the method, there needs to be a valid reason, such as altered circumstances that prompted the company to choose the original criteria. You should also explain the reasons for the change and its impact on the annual accounts, applying it to all elements with the same features.
- Prudence: Until the completion of the sale, it is not reflected in the accounts.
- No Compensation: Balances must be included in two different accounts: a right to receive and a payment obligation. This avoids loss of