Conceptual Framework of Accounting (Leaving Cert Accounting): Flashcards

Fundamental rules businesses follow when preparing financial accounts

Assumes that a business will continue operating into the future

Income/expenses recorded when earned/incurred, not when cash paid

Profits recorded only when certain; losses provided for when likely

Same accounting methods used from one period to the next

Business is treated as separate from its owner

Only items measured in monetary terms can be recorded

Profit is recognised at point of sale, not when payment is received

Every transaction affects at least two accounts

Understandable, reliable, relevant, comparable