Four basic principles of accounting (principles of accounting) are used to record the transaction are:
1. Historical Cost Principle
GAAP requires that assets and liabilities of the sebagiana treated and reported based on acquisition price. This is often called the principle of historical cost (historical cost principle).
Cost (cost) has important advantages compared to other assessments, is reliable.
2. Revenue Recognition Principle
Important issues facing the company is when revenue should be recognized. Revenues are generally recognized when it is direalisai and has been produced. This approach is often viewed as the principle of revenue recognition (revenue recognition principle).Revenue is said to have been realized (realized) if the products (goods and services), merchandise, or other assets have been exchanged for cash or claims to cash. Income can diakatakan direalisai (realizable) if the assets received or held are readily convertible into cash or claims to cash. Assets said to be converted into cash if they can be sold or exchanged in active markets at prices that can be determined easily without significant additional cost.
During production. Revenue recognition prior to contract completion allowed for contract-specific long-term construction contracts.
End of Production. Sometimes, the revenue can be recognized after the end of the production cycle but before the sale occurs.
Cash receipts. A cash receipts basis of other confessions. The basic approach will be used only when cash is not possible to determine the number of sales revenue at the time because of the uncertainty billing.
3. The matching principle
In recognizing expenses, income used is "let the burden of following the earnings." Expenses are recognized not when wages are paid, or when the work is done, or when the product is produced, but when it works (services) or products actually contribute to revenue. This practice is referred to as prisnip matching (matching principle) because the state of hard work (expenses) be matched with the achievement of (income) as long as it is rational and can be applied.
4. Full Disclosure Principle
In deciding what information will be reported, yan common practice is to provide sufficient information for judgments and decisions affecting the users. This principle is often called the principle of full disclosure (full disclosure principle), recognizes that the nature and amount of information included in financial statements reflect a series of trade off assessments.