What is financial account? What do you mean by accounting principles?explain its main characteristics?
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Answers
Answer:
Accounting principles refer to those rules and regulations that are universally followed by the accountants for recording accounting information. They play the role of guidelines for recording and reporting financial transactions.
Explanation:
In other words, the accounting principles are the common rules that that are universally adopted by the accountant while compiling the financial statement that is distributed to people outside the business concern.
Features :
1. Accounting Principle is Man-Made: They are the best suggestions based on practice and assumption. They are helpful it used by all enterprises since they ensure uniformity and understandability.
2. Accounting Principles are time-based techniques: Accounting principles may change to improve the quality of accounting information with time.
3. Accounting principles are universally Accepted: Accounting principles are generally accepted guidelines for accounting. The principle becomes generally accepted if it meets three content, relevance, objectivity, and feasibility.
Characteristics :
1. Accounting is the language of business.
2. These principles/rules have been developed with the main aim to maintain uniformity in the accounting practices.
3. Generally, the term ” principle” refers to the fundamental belief or a general truth which ance established does not change.
4. Accounting principles are still evolving in nature.
5. Accounting principles can not be validated by reference to natural laws.
6. AICPA stands for the American Institute of Certified Public Accountants.
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