In the year 2023, marking the emergence of important changes in the field of accounting, and understanding and adherence to these basic principles is the key to keep the accounting system operation, powerful and efficient. Let's Vietnam Accnet learn the basic principles of accounting so you can apply correctly and build yourself a solid foundation to grow the business.
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1. Basic principles of accounting what is?
The basic principles of accounting are the rules and general standards are used to ensure the authenticity, completeness and consistency of accounting information. From there help for investors, businesses and other stakeholders can easily understand and use accounting information to make decisions appropriate business.
2. 7 basic principles of accounting most standard 2023
Currently, there are 7 principles in basic accounting is admitted that an accounting professional should master. Specific include:
- Principle accrual basis.
- Principles of Continuous Operation.
- Principles of the original Price.
- Matching principle.
- Principle of consistency.
- Principle of Caution.
- Principle of materiality.
2.1. Principle accrual basis (Accrual basis)
- Principles of accrual basis is the regulation of recording all business financial of business related to the assets, liabilities, revenues, expenses, and capital ownership.
- Special points of basic principles of accounting this is the recording right information at the transaction arises, instead of waiting to the time of actual income and expenditure. Through the establishment reported on the accrual basis, the reader has the opportunity to understand more about the financial situation of the business from past, present to future. Thus, it helps improve accuracy and transparency in the management accounting of the business.
2.2. Basic principles of accounting of Continuous Operation (Going concern)
- All financial statements should be built on the basis of the assumption that the business will continue to operate the business of manufacturing in the near future. In the case of reality does not match the assumptions, the report must be based on a different basis and comes with interpretation justified on that basis.
- The accountant should comply with the principle activities that do not set too account the reserve. The reserves are not more appreciated value of the property, and income not to be underestimated than the value of accounts payable as the cost.
- Can only recognize revenue and income when there is evidence of the ability to generate economic benefits. Similarly, expenses are recorded only when there is the ability to demonstrate the ability to incurred costs. Make sure that the process accounting records reflect accurate and complete current status of business over time.
2.3. Basic principles of accounting about the original Price (Historical cost)
- The company's assets must be credited with the original price, which the original price is the amount of money that a company must pay to own that property. Original price is determined based on the amount of the payment need to be paid, or may be calculated according to the fair value of that asset at the time recorded.
- Process calculate the original price must adhere to the guidelines closely to ensure the accuracy and transparency. Accounting was not arbitrarily adjust the original price of the assets unless otherwise stated in the accounting law. Words that help to ensure consistency and transparency in the process, the recorded value of the assets of the company.
2.4. Matching principle of accounting (Matching)
- The compatible fit between revenue and cost are important factors in 7 basic principles of accounting when work. When recognition of revenue, the accounting needs at the same time determined and recorded in full the respective expenses related.
- Costs related to revenue consists of expenses incurred in the period corresponding to revenue. Based on this, the company can perform precise analysis of the profit and also the important basis to calculate corporate income tax, which the company must submit to the state.
2.5. The consistent principle of accounting (Consistency)
- Consistency is essential in the basic principles of accounting, especially between policies and accounting methods that businesses are adopting. This requires consistency and to ensure transparency of accounting information.
- When there are any changes, businesses need to supplement in the report, clear explanations about the reasons of the change and the factors that impact on that change. Words that create an image full and transparent about the process of accounting of the business. At the same time to fully meet the legal requirements to ensure the reliability of financial information.
2.6. Basic principles of accounting about prudence (Prudence)
- Principles of prudent accounting requirements must express caution and the special considerations when making the assessment and accounting estimates, especially in situations of uncertainty.
- Caution do not mean to create the reserves too big to overestimate the value of assets and income, or rating lower than the accounts payable and expense. Accountants need to keep the estimate of their considerations and reasonable, reflect the economic situation of the enterprise.
- Sales and revenue should only be recognized when there is evidence of clear and authentic about the ability to generate economic benefits. Similar to the recorded cost, there should be evidence of the possibility arises.
2.7. Basic principles of accounting about materiality (Materiality)
- Principle of materiality is a principle show information depends on the magnitude and nature of the data or flaws in some specific situations. When information is missing or incorrect, could cause the disparity in financial statements.
- Materiality of information should be considered from two aspects: qualitative and quantitative. This principle emphasizes the importance of assessing and verifying information to ensure that data given is reliable and properly reflect the financial situation of the business.
3. 5 accounting principles additional new updates
In addition to cevil basic principles of accounting on, today there are more 5 accounting principles supplements is updated in the accounting standards the international. These principles include:
+ Principles:
- All financial statements should be based on evidence, objective and reliable.
- Apply this principle helps to ensure the independence and objectivity of the accounting department.
+ Public principles:
- Financial statements should be clear, understandable, and contains sufficient information related to business activities.
- Financial statements must be public clarity and detail.
+ Principles of business entity:
- Any economic unit who participated in business activities need to set up reports and notes.
+ Principle measure currency:
- Money is used as a homogenous unit in accounting that reflects what can be measured by money.
+ Principles of the accounting Period:
- Is the unit fixed time in which the financial statements are set.
- For comparison, the accounting period usually have time relatively evenly (month, quarter, year).
4. Application of the basic principles of accounting easy with AccNet Cloud
AccNet Cloud is an online software that helps business easy app 7 basic principles of accounting. This software provides a full range of features required for businesses to record economic transactions, financial reporting and compliance with the accounting regulations.
ACCOUNTING SOLUTIONS SMART ACCNET CLOUD HKD
With technology cloud advanced AccNet Cloud HKD allows businesses to control, comprehensive financial anytime, anywhere. Integrated system management books, invoices, financial statements, asset management, fixed, collated automatically. All processes are streamlined, minimize errors and maximize work efficiency.
Benefits of using accounting software AccNet Cloud HKD:
- Automates the entire accounting process
- Save operating costs thanks to the elimination of hardware investment
- Access accounting data from anywhere through cloud platform
- Data is always stored immediately
- Security financial data, absolute safety
- Intuitive interface, user friendly
- Smooth connection to the ERP system
- Constant updates of the provisions current accounting
AccNet Cloud HKD the is a strategic partner in the journey that lead the business to success. Select Vietnam - Choose the superior option difference.
With AccNet Cloud, businesses can easily:
- Set and apply the method of accounting consistently throughout the duration use of the software.
- Identify the transactions and economic events have meaning significantly with respect to the financial situation of the business.
- Recognize revenue when ownership of the goods/services have been delivered to the customer.
- Recorded costs as costs incurred related to the creation of revenue.
In addition, AccNet Cloud also provides many other features to help businesses manage accounting efficiency, including:
- Account management.
- Management accounting books.
- Financial reporting.
- Comply with current accounting.
With the advantages of AccNet Cloud is a solution for effective accounting help business easy application of the principles basic accounting.
Compliance 7 basic principles of accounting is important step to build a sustainable foundation for the business. Transparency, objectivity and the public in financial management is key for the long-term development. Hope these information on their Vietnam helping you understand more about the accounting industry and see you in the article other useful!
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