ACCT 410x Foundations of Accounting Concepts, Principles and Conventions

ACCT 410x Foundations of Accounting Concepts, Principles and Conventions

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Accounting Concepts, Principles and Conventions Basic Assumptions about the Accounting Environment Business Entity Business entities are separate economic units that control resources and obligations and must have separate and distinct records from other related parties or entities. Going Concern There is an assumption that a particular enterprise will continue in existence for a period of time long enough to carry out its objectives and commitments. Qualitative Characteristics of Accounting Information Monetary Unit Money is the basic measurement unit. This means that in the United States, items included in the accounting system must be quantifiable in dollars. No allowance is made for inflation. Relevance Accounting information is relevant if it is capable of making a difference in a decision. Reliability Accounting information is reliable if it measures without bias what it is suppose to measure. Verifiability is a prime ingredient of reliability.
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