Assumptions, Concepts, and Principles
Accounting is a body of knowledge that is neither based on natural phenomenon nor relies on laboratory experiments and physical observations to validate its practices. Yet it observes principles and follows practices that have been generally accepted by practitioners and users of financial information. This validation is a result of sound practices built upon concepts and assumptions that have passed the test of time.
At the end of this lesson, you shall be able to:
- Understand the nature of assumptions, principles, and constraints
- Distinguish assumptions from principles
- Understand the effect of constraints in financial reporting
- Appreciate the impact of principles and assumptions in accounting practice
