The principles of accounting They are a set of rules and regulations that should be followed for the correct accounting of assets and other economic and financial elements of the company, in this way reflect a faithful perspective of the activity that it plays.
They are called "Generally Accepted Accounting Principles" and they establish an action guide with concrete and conventional meaning. It can be said that in a certain way they constitute a systematized and regulatory law for the accountant.
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In short these accounting principles regulate the process of financial Accounting, establishing the information to be included and the way to organize and present it in the financial statements. These principles reflect the objectives and basic characteristics of financial accounting.
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In this article you will find:
Accounting principles
There are universal principles, however they are usually dictated by the association of accountants of each country, finally seeking the objectivity of the financial information reflected in the states accountants.
Fundamental principle
Equity
This is the basic postulate that should guide the action of the accountant at all times.
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Is synonymous with impartiality, represents the orientation guide linked to the ethics and justice, referring to the fact that the accounting information must be prepared with fairness to third parties and for the company itself, without favoring anyone in particular.
Under the principle of equity, opposing interests are made compatible, without conflicts with the particular interests of those who use this accounting data.
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General principles
They are those accounting principles that identify and delimit the economic entity and all its financial elements.
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Entity
The concept of «entity»To refer to the same financial statements, leaving the owner as a subjective element or as a third party.
The economic activity is carried out by identifiable entities constituted by capital, human resources and natural resources, coordinated by a directive that take decisions focused on achieving the entity's objectives.
The entity is identified based on criteria such as the set of resources with structure and operation destined to satisfy a certain need of society and on the other hand as the center of autonomous decisions regarding achievements specific.
Being clear that the personality of a certain business is independent of the personality of its shareholders or owners. Therefore, its financial statements only include assets, obligations and rights of the economic entity.
Enconimics goods
The financial statements they count economic assets, that is, tangible and intangible assets with an economic value that can be valued in monetary terms.
Every asset susceptible to exchange value is recorded in books, regardless of how it was obtained. Example: tangible goods (merchandise, raw material, machine, inputs) and intangible assets (patents, insurance, client portfolio, projects)
Account Currency
In this accounting principle The equity valued in prices is reflected to reduce the components to an expression that allows them to be grouped and compared. Generally used as account currency, the currency unit of legal tender in the country within which the entity operates.
Going Company
The entity is presumed in full force and projection also known as continuity of the company is based on the idea that the company will continue operating indefinitely unless otherwise specified, due to significant adverse situations, continuous economic losses and insolvency.
When the figures constitute appreciated liquidation values, they must be clearly specified and they will be accepted when the entity is in liquidation.
Valuation at «Cost»
Determine the need to value assets, the cost of production or acquisition. Without allowing currency fluctuations to alter this process.
It is the main valuation criterion that conditions the formulation of financial position statements. Without ignoring the coexistence of other criteria and rules applicable in explicit circumstances.
Accrued
In applying this accounting principle, the expenses and income are recorded in the referred accounting period despite the fact that the supporting document was dated the following fiscal year. Accrue expressly recognize and record accounting events (interest on loans, remunerations due pending payment, Asset depreciation, royalties) in accounts at a certain date.
It considers the changes in equity that fall within the scope of an exercise without considering whether they have been paid.
Exercise period
Start-up companies have the need to measure the result of management taking into account the passage of time, for administrative, legal and fiscal purposes or for simple compliance with commitments.
Objectivity
Changes in liabilities, assets and in the accounting expression of equity must be recognized in the accounting records, measured objectively and expressed in the currency of account.
Realization
The economic results must be computed after being carried out, that is, when the operation that originates them remains perfected by applicable legislation or commercial practices and that the risks inherent to said operation.
Prudence
When choosing between two values for an active element, either the lower must be chosen, or it must be accounted for in such a way that the aliquot is lower. This principle can also be expressed by saying: "Account for losses when they are known and gains only when they have been realized."
Uniformity
The general principles and particular standards used to prepare the financial statements of a given entity should be applied uniformly from one year to the next.
The principle of uniformity implies that once the application of a standard has been decided, the operations to come must be treated in the same way, so as not to alter the items of the financial statements, making it difficult to compare the different periods.
Significance and relative importance
In weighing the application of the accounting principles and standards should be established a practicality. There is no line that sets the limits of what is significant. The best criteria must be used to resolve what corresponds in each case and in accordance with the circumstances. This principle refers to the flexibility that must exist to admit measurements that do not respond to what is prescribed by the accounting discipline.
Exposition
The financial statements must contain the basic and additional information and discrimination necessary for the adequate interpretation of the financial scenario and the economic results. This criterion implies formulating the reports in a way that is understandable to users.
