Accounting Principles

Generally Accepted Accounting Principles And Basics

The first items on the list of the most popular specialties in the modern labor market must include the profession of an accountant. 

You can get information about the basics and essence of fundamental accounting principles in both higher and special educational institutions of different levels of accreditation. Before the profession of an accountant was not quite prestigious, and for financial reporting, it was enough to have a knowledge of the basics and principles of financial accounting. 

Today, things have changed, and a specialist in full service business accounting must have in-depth knowledge in several related fields. So, in this article, you can learn about basic accounting principles, the five fundamental principles of accounting information systems, and other important information.

What is accounting?

Accounting is implemented by continuous documentation of all business transactions. Its purpose is to register and summarize information about the state of property, liabilities, and capital of the enterprise. Fundamentals of accounting – the same ancient science as human economic activity. The first accounting documents can be considered clay tablets from the time of the Babylonian kingdom.

Also, an example of primitive accounting is the pile – a writing system in the form of complex rope plexuses and knots, which was used by the ancient Incas.

The emergence of Roman law contributed to the growth of accuracy and laid the legal foundations of accounting, and then formed the chamber and simple accounting. Double entry in accounting was first introduced into commercial practice in the thirteenth century in Venice, and in the eighteenth century, the rules of debit and credit were formed. It was then that they began to keep records on behalf of the company, not on its owner.

Accounting tasks

The main task of accounting – to form complete and reliable information about the commercial activities of the enterprise and its property. That is to make complete and reliable reporting. It allows:

  • to prevent the appearance of negative results as a result of economic activity of enterprises;
  • to ensure the financial stability of the organization by identifying the reserves that the economy has;
  • adhere to legal norms during business transactions and control their expediency;
  • control the availability and movement of property and commercial transactions;
  • to regulate the use of material, labor, and financial resources of the enterprise;
  • to regulate compliance of economic activity with the established normative-legal documents.

Provisions and principles of accounting

What are the generally accepted accounting principles? The principles of accounting are the provisions governing all statements that will be accepted in the future. The basics of accounting provide knowledge of the following accounting principles:

  • Autonomy. It is known of the generally accepted accounting principles. One or another business entity exists as an independent autonomous person, whose property is separated from the property of co-owners, employees, and other farms.
  • Double-entry. All transactions and facts are recorded simultaneously on debit and credit accounts.
  • The current organization. Maintaining the viability of the company and its position in the market by fulfilling its obligations to partners. These can be suppliers, creditors, consumers, etc.
  • Objectivity. All business transactions must be registered and documented by a trustee in accounting.
  • Cautions. Distortions of assets, income, expenses and liabilities should be completely avoided when making payments. Otherwise, accounting loses its objectivity, neutrality, and reliability.
  • Charges. Data on transactions that have been performed should be entered as they occur, not upon payment.
  • Frequency. Financial generalization should be repeated periodically. For example, monthly, quarterly, semi-annually, year. This will help you to calculate the financial results correctly later.
  • Privacy. Responsibility for disclosure of internal accounting information is provided.
  • Monetary measurement. All facts of economic activity and production are quantified in the currency of the country in which the enterprise is resident.
  • Consequences. Adherence to the traditions and achievements of the state.