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Principles - most cost-effective way Cost benefit – the...

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Principles Historical cost principle – transactions are recorded at the prices prevailing on the date the transaction took place. Revenue recognition – record when transaction takes place and there is a high probability of collection and when work to earned revenue is substantially accomplished. Matching – record expenses when they are incurred to earn revenue. Full disclosure – provide sufficient information to influence a decision. CAN THESE PRINCIPLES BE VIOLATED? Constraints Materiality – small amounts not likely to influence decisions are to be recorded in the
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Unformatted text preview: most cost-effective way. Cost benefit – the benefits of information to users should outweigh the cost of gathering and reporting it. Conservatism – in accounting and reporting exercise care to not overstate assets and revenues or understate liabilities and expenses. Accountants are dismal, depressing, humorless people, but that only refers to their personal lives. At a professional level, they prefer to report bad news. Industry practices – industry-specific measurements and reporting may be acceptable...
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