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*accounting entity - wherein the business considered as "a separate and distinct entity apart from the owner"
* going concern assumption - the business is assumed to have a continuous life of existence.
*time period assumption -since the business is assumed to have a continuous life of existence, the life of the business is divided into equal periods wherein at the end of each period, the accountant prepares a financial statements. the accounting periods can be monthly basis, quarterly basis, semi-annual basis and yearly or annual basis (you can use calendar year, fiscal year or natural business year).
*unit of measure - use of the country's standard monetary unit (like dollars in U.S.A, Yen in Japam). This is to assure that the "unit of measure| has a stable value (which means, the purchasing power is constant regardless of inflationrates or fluctuations in the money value.
* Accrual basis - assumes that the recording of income and expenses follow the accrual basis of accounting. That is : income is recognized when earned regardless of when it is received and expenses is recognized when incurred regardless of when it is paid.
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What are the basic assumptions in accounting?
Economic Entity Assumption Going Concern Assumption Monetary Unit Periodicity(Time Period) Assumption
Basic Accounting ?
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