Basic Postulates of Financial Reporting Standards NIF A-2

Purpose of NIF A-2

The purpose of NIF A-2 is to define the basic tenets on which to operate the accounting information system.

Phases of the Accounting Information System

The phases of the accounting information system include:

• Identification
• Analysis
• Interpretation
• Collection
• Processing
• Accounting recognition of transactions and internal changes

What is an Economic Entity?

It is an identifiable unit engaged in economic activities, consisting of combinations of human, natural, and capital resources, coordinated by an authority that takes decisions aimed at achieving the purposes for which it was created.

Going Concern Postulate

The economic entity is presumed to exist permanently in an unlimited time horizon.

What is Accounting Accrual (Devengación)?

The effects of transactions carried out by an economic entity with other entities, the internal changes, and other events that have affected it economically, should be recognized for accounting purposes in its entirety, at the time they occur, regardless of the date they are deemed made for accounting purposes.

What is Realization?

Realization refers to the time when the recovery materializes or payment of the relevant items occurs. Given this, the time of accounting devengación of an item does not necessarily coincide with the time of completion.

What is an Accounting Period?

This assumes that the economic activity of the entity, which has a continuous existence, can be divided into conventional periods, which vary in size, to present the financial position, operating results, changes in capital or equity accounting, and changes in their financial situation. This includes operations that, although they have not fully completed, have already affected the organization financially.

Association of Costs and Expenses with Revenues

The costs and expenses of companies are identified by the income generated in the same period, regardless of the date they are made.

What is Valuation?

Capturing the most objective economic value of net assets.

What is Economic Duality?

It is also known as double-entry; this assumption states that economic events conducted by an entity must be expressed in terms of accounting systems that give voice to the two aspects involving the entire financial transaction.

What is Consistency?

Similar operations in an entity must match the same accounting treatment, which must remain over time, as long as the economic substance of the transactions has not changed.