Business Cheat Sheet by marie.madero

Assumes that a business will carry on tradinf for the forese­eable future.

States that the accounts of a business should be prepared on the same basis every year.

States that accoun­tants should be cautious when reporting the financial position of a business. revenue and profit should not be recorded unless it is certain; anticipate all possible losses and record them as soon as they are known; choose the lowest value when faced with a choice of asset values or revenue; highest value when referring to costs

Accruals: revenue whould be recorded when it is earned and not hen the money is received. (same goes to costs). Matching: states that when calcul­ating profit, revenue should be matched against expend­iture incurred in earning it.

Accounts should be based on verifiable evidence rather than personal opinion

Accounting should be based on the original costs incurred in the transa­ction

Revenue shouldn't be recognized until the exchange of goods or services has taken place.

Accoun­tants should avoid wasting time trying to accurately record items of expend­iture which are trivial.