Fichas
Accounting Rules
Fichas del conjunto (15)
- 1Entityaccounting information restricted to the entity itself e.g. it should not be extended to the private affairs of the individuals connected with it
Example: A partner of ‘Events R Us’ who pays income tax based on her share of the partnership profits for the last year and included in General Expenses - 2Periodicityaccounts prepared at the end of a defined period of time and this adopted as the regular accounting period
- 3Going Concernaccounts prepared on the assumption that the entity will continue in existence for the foreseeable future
Example: The Ricoh Arena Events owns a motor vehicle which would only be sold for £8,500 if the company went into liquidation - 4Quantitativeonly information which is capable of being easily quantified should be included in the accounting system
Example #1: The company’s good event research & development record
Example #2: The value placed on Gary Barlow in ‘Take That’ accounts - 5Money MeasurementQuantifiable information must be translated into money terms before inclusion into the accounting system
Example: Expenditures on researching a new Theme Park near Birmingham - 6Historical Costtransactions recorded at their original purchase price
Example: Event Equipment purchased for X-Factor Live Show for £20,000 which would cost £35,000 now - 7Realisaton (legal transfer)transactions, either sales or purchases, are recorded in the books only when legal title transferred not when they are delivered or paid for leads to bad debts being declared in future accounts. The realization rule relates to the purchases and sale of goods i.e.. trading items.
- 8Matching: accrualThe cash received and paid are adjusted to match the business transacted in that accounting period.
An accrual is the amount that is owed by the entity at the end of the accounting period in respect of services received during the period. - 9Matching: prepaymentThe cash received and paid are adjusted to match the business transacted in that accounting period.
A prepayment is an amount that is owing to the entity at the end of the accounting period as a result of paying in advance for services rendered in respect of a future period. - 10Dual AspectAll transactions recorded twice to reflect both the giving and receiving aspect of each transaction.
Example: The marketing director of Merlin Entertainment who notices that each transaction is entered twice in the company’s ledgers - 11MaterialityThe other rules can be relaxed if the costs of recording the transactions are greater than the benefits gained.
Example #1: The valuation of a gallon of petrol in the company’s lawn mower at the Ricoh Arena
Example #2: The odd box of paper clips in the stationery cupboard of Forever Wedding Planning Limited at the end of the financial year - 12Prudenceif there is doubt about a transaction, income should be underestimated and expenditures overstated, so losses overstated and profits understated
looking at worst case scenario on accounts, being realistic with companies that owe you money
EXAMPLE: a customer of the Royal Opera House who might go bankrupt owing the company money - 13Consistencyrules and practices used should not be changed unless something exceptional happens
- 14Objectivitypersonal prejudice should be avoided in the interpretation of the basic accounting data
Example: The Premier Events sales manager who is always optimistic about the credit worthiness of prospective customers - 15Relevance (true and fair view)accounting statements should not include information which prevents the user obtaining a true and fair view of the information
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- 202SEM Finance Fichas sobre Accounting Rules, creado por Kirsty McDermott el 18/10/2017.
- Creado por
- Kirsty McDermott
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