Write an essay in 250 to 300 words, including the following: The basic assumptions of accounting The principles of accounting The constraints of accounting A conclusion stating how you think sound financial reporting depends on principles, assumptions, and constraints. Refer to the U.S. GAAP in your response. Accounting is more than just adding numbers. In accounting, we have what is called assumptions. Assumptions provide a foundation for the accounting process. There are four main basic assumptions of accounting. The first one being the monetary unit, states that only the transaction that can be expressed as money may be included in the statement. The second assumption is the economic entity. The economic entity, deals with separating the activities of the owner and the activities of the entity. The third assumption is time period. This is just simply saying that companies can divide their business activities into quarters, months or years. The fourth one that we have is going concern, which assumes that the company will
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This note was uploaded on 10/17/2010 for the course ACCOUNTING 100 taught by Professor Sing during the Spring '10 term at University of Phoenix.