HOW TO FOLLOW ACCOUNTING PRINCIPLES

 Hello friend. I hope you are doing well and enjoying this voyage in the world of accounting. In whatever profession you engage in, there must be a set of rules or principles that are required to be followed in order to bring about order in the way of doing things. Accounting is no exception. Therefore as an accountant, you should know these principles and how to keep them. These include;
1. Principle of regularity; this can be simply kept by conforming to the enforced rules and laws of the accounting licensing body in your country.

2. Principle of consistency; this is also kept by you as an accountant by application of the same accounting procedures in the work you do from day to day.

3. Principle of sincerity; reflection of the true reality of a company’s financial status is how you keep the principle of sincerity. There are a lot of people with vested interests in those results. Misrepresentation of such information is what lead to the 2008 economic meltdown that has since ‘’rocked’’ the world, and not the good kind of ‘’rock’’.

4. Principle of the permanence of methods; By comparing financial information published by the company and checking to see if it is coherent with the records is how you follow this principle.

5. Principle of non-compensation; You should be able to show the full financial status of the company you are accounting for and not replacing figures such as debt with an asset.

6. Principle of prudence; this is similar to the principle above, therefore to keep it, you should be able to show the records ‘’as is’’ and not include projected results that have not been realised yet.

7. Principle of continuity; when accounting in a business you assume that a business is never interrupted, then you should keep a provision of assets of the company stating their historical and current value but not future value.

8. Principle of periodicity; this principle is kept when you accurately allocate a transaction through the period for which it has been paid. For example when somebody pays for a subscription of an entertainment magazine for a whole year, you should distribute the payments throughout the year and not as a one time payment on one day.

9. Principle of full disclosure; keeping this principle requires you to show all information and financial records pertaining to the financial position of the company.


That’s it for now! I hope that helped you in becoming abetter accountant of your online business or money. If you have a question or need information, don’t hesitate to write to me at cashincomes3@gmail.com.