Accounting Concepts – Business Integrals

Accounting – Basic Concepts

Separate Legal Entity	The business is a separate entity to its owners
Going Concern	The entity is expected to continue operation into the foreseeable future
Monetary Units	Economic activity in the financial statements is expressed in a common monetary unit
Time Period	Business operations are divided into time periods for accounting purposes
Historical Cost	Assets are recorded at cost value

Financial Accounting – For external audiences and to determine investment. Financial accounts focus on past performance and are audited

Management Accounting – For internal management to inform performance and focuses on future performance

Tax Accounting – For calculation of tax obligations

Cash Accounting – Transactions reflect cash movements

Accrual Accounting

Transactions are recorded when revenue and expenses are incurred, not when cash is paid
Matching principle – costs recognised in period in which revenue is generated