Accounting Assumptions

Accounting Assumptions - that companies record their assets...

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Accounting Assumptions, Principles, and Constraints Jennifer O’Neal XACC 280 Angelia Hunter Axia College of University of Phoenix October 21, 2011
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When dealing with accounting, it could be said that one would have their own assumptions of exactly what accounting could be interpreted to mean. As well as assumptions, there are also principles and constraints which are established within the accounting field. A clear explanation of principles, assumptions, and constraints can be done. The assumptions in accounting are first the monetary unit assumption which is the requirement of companies to express transaction data in accounting records in terms of money. Economic entity assumption is the requirement of each entity activities is separated from the activities of the owner and other economic entities, (Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. 2008). The cost principle, one principle of accounting, dictates
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Unformatted text preview: that companies record their assets at their own cost for the time that its purchased, and for how long it is held. Another principle is the GAAP (Generally Accepted Accounting Principles) where how to record economic events is indicated. There are also many other principles such as the Securities and Exchange Commission, the Financial Accounting Standards Board, and also the International Accounting Standards Board, (Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. 2008). To ensure sound financial reporting, the dependence of using proper principles such as the GAAP will keep companies accounting in tact. The assumptions, particularly the monetary unit assumption will keep information clear as well as recorded, Constraints of knowing what can and cant be done within the companys accounting....
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