Ch 1 · Theoretical Framework

6 concept points · 0 formulas · 4 exam-critical points.

📘 Core concepts

• 1Accounting: process of identifying, measuring, recording and communicating financial info.
• 2Going concern: entity will continue for the foreseeable future (typically 12 months).
• 3Accrual basis: revenue/expenses recorded when earned/incurred, not when cash flows.
• 4Consistency: same accounting policies applied period to period unless change is justified.
• 5Prudence: anticipate no profit, but provide for all probable losses.
• 6Materiality: items significant enough to influence decisions must be disclosed.