Accounting principles会计原理(英文)

2021年2月13日发(作者：混种)

Accounting Principles Used to Prepare the

Financial Statements

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Table of Content

1.

Introduction.. .................................................. ............................1

2. Analysis of eight accounting principles.......................................1

2.1 Time Period Assumption........................................ ................1

2.2 Principle of Historical Cost....... .............................................2

2.3 Full Disclosure Principle.............................. ..........................2

2.4 Matching principle..... .................................................. ...........3

2.5 Going Concern Principle............ .............................................4

2.6 Revenue Recognition Principle............................. ..................4

2.7 Materiality........................ .................................................. ......5

2.8 Con servatism......................................... ...................................5

3.

Conclusion.... .................................................. ...............................6

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References.................................. .................................................. ......7

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1.

Introduction

The

goal

of

financial

statements

is

to

provide

users

with

accounting

information

relevant to the enterprise financial position, operation outcome, cash flow etc., reflect

managers’ performance of

fiduciary responsibilities,so as to help financial statement

users

make

proper

economic

decisions.

In

this

paper,

the

author

will

explain

eight

different accounting principles used to prepare the financial statements with suitable

examples or illustration.

2. Analysis of eight accounting principles

2.1 Time Period Assumption

The concept of Time Period refers to that accounting information should be collected

and

handled

following

time

periods

(Zeff,

2012).

Time

Period

Assumption

is

a

necessary supplement of Going Concern Assumption. This principle lays a foundation

for

other

accounting

principles

such

as

Cost

Principle

and

Matching

Principle.

Assuming

an

accounting

entity

should

endlessly

operate

a

business,

logically

the

provision of accounting information needs to have regulated time period, which is the

premise for accounting to perform effect (Schipper, 2003).

The principle of Time Period Assumption manually divides the constant production

and operation activities of an enterprise into various time periods, calculate economic

activities

and

report

operation

outcome

by

stages

(Zeff,

2012).

It

is

because

stakeholders

need

to

timely

know

the

financial

condition

and

operation

outcome

of

the enterprise, thus the enterprise should regularly provide accounting information as

the basis of decision- making.

Clarifying

the

basic

premise

of

accounting

time

period

has

great

importance

to

accounting,

Due

to

the

time

period,

the

differences

between

this

period

and

other

period

exist,

thus

generates

the

differences

between

accrual

basis

and

cash

basis,

different

types

of

accounting

entities

have

the

benchmark

of

keeping

accounts,

and

further

the

accounting

methods

such

as

accounts

receivable,

accounts

payable,

accrual, deferral, prepaid and so on.

In China’s accounting practice, an accounting year refers to January 1

st

to December

31

st

(Zeff,

2012).

For

example,

Financial

Statements

of

2012

reflects

the

financial

1

information from January 1

st

2012 to December 31

st

2012. Financial statements which

less

than

one

year

are

called

mid-term

statements.

Mid-term

statements

are

mainly

embodied as semi- annual statements and quarterly statements.

2.2 Principle of Historical Cost

Principle of Historical Cost means that the recording of accounting elements should

use

the

acquisition

cost

when

economic

businesses

took

place

as

the

standard

to

measure (Weygandt et al, 2010). The main content of this principle is that all kinds of

assets

gained

by

an

enterprise

should

use

the

primitive

cost

(actual

cost)

occurred

when purchasing or building to record, and make it as the basis of share and transfer

cost (White, 2006). When price of commodities changes, enterprises cannot adjust its

accounting value except for state policy changes. Valuation according to actual cost

can avoid

randomness,

make accounting information reliable and easy to

know and

compare.

Principle

of

Historical

Cost

is

mainly

used

to

determine

the

cost

of

assets

on

the

account book. For example, an enterprise spent $$5 million buying an office building

on January 1

st

2010, thus when recording

，

the actual cost of the building is $$5 million.

Suppose that till January 1

st

2013, the market price of this office building increased to

$$8 million, at that moment, there is no need to adjust the original recorded value, the

original actual cost or the historical cost should be still on the account book. It should

be noticed that, it does not mean that recorded value cannot be adjusted. For instance,

this enterprise will sell the building, so assets appraisal will be conducted. This is a

special case (White, 2006).

2.3 Full Disclosure Principle

Full

Disclosure

Principle

refers

to

that

in

order

to

achieve

the

just

reflection

of

an

enterprise’s

economic events

and the influence, all necessary information should be

fully provided and should be easy for users to understand (Weygandt et al, 2010). The

goal of full disclosure is to meet users’ demand fo

r decision-making. Full Disclosure

Principle has several aspects of meaning.

Firstly, comprehensiveness of disclosure. Comprehensiveness means any information

which has influence on users’ decision

-making or reflects economic events should be

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