Accounting Principles

Business Entity

A business is considered a separate entity from the owner(s) and should be treated separately. Any personal transactions of its owner should not be recorded in the business accounting book unless the owner’s personal transaction involves adding and/or withdrawing resources from the business.

Going Concern

It assumes that an entity will continue to operate indefinitely. In this basis, generally, assets are recorded based on their original cost and not on market value. Assets are assumed to be held and used for an indefinite period of time or during its estimated useful life.  And  that assets are not intended to be sold immediately or liquidated.

Monetary Unit

The business financial transactions recorded and reported should be in monetary unit, such as US Dollar, Canadian Dollar, Euro, etc. Thus, any non-financial or non-monetary information that cannot be measured in a monetary unit are not recorded in the accounting books, but instead, a memorandum will be used.

Historical Cost

All business resources acquired should be valued and recorded based on the actual cash equivalent or original cost of acquisition, not the prevailing market value or future value. Exception to the rule is when the business is in the process of closure and liquidation.

Matching

This principle requires that revenue recorded, in a given accounting period, should have an equivalent expense recorded, in order to show the true profit of the business.

Accounting Period

This principle entails a business to complete the whole accounting process over a specific operating time period.

Consistency

This principle ensures similar and consistent accounting procedures is used by the business, year after year, unless change is necessary.

Consistency allows reliable comparison of the financial information between two accounting periods.

For more you can check 2D Animation Cost