The document outlines several basic accounting principles: 1) The cost principle states that assets should be recorded at their actual cost rather than market value, reducing subjectivity. 2) The accrual principle means revenue is recorded when earned, not when cash is received, showing work done rather than future work. 3) The matching principle matches current expenses with revenues to analyze financial performance and effectiveness. 4) Businesses must disclose records so their financial status can be judged appropriately, though revealing data should not cause unjustified expenses or misconceptions.

1. Basic Accounting Principles The Cost Principle<br />Businesses need to register and report all their assets depending on the actual cost received to the businesses, while gaining those assets rather than the free-market rate of the assets themselves. <br />Cost principle is a reliable method to record and report data. Also, it decreases the chance for elements like predetermined market values to step in with the accounting. <br />The Accrual Principle<br />Businesses need to register and report revenue when it's earned or made and realized definitely not once the cash for the revenue is received.<br />The accrual principle basically shows the work finished by the company/business and not the work that needs to be done for the future.<br />The Matching Principle<br />Businesses get to analyze current expenses and revenues. <br />The matching principle shows the market, how well companies/businesses are doing financially and effective they really are. <br />The Disclosure Principle<br />Businesses have to disclose their records, so that judgment over their financial status can be made accordingly. <br />But revealing the accounting and financial data of the companies/businesses should not make them decrease unjustified expenses or make incorrect notions.<br />Basic Accounting ConceptsBusiness Entity<br />This principal treats the company as a separate entity from its owners. Personal accounts of owners/partners should be kept separate from profits and expenses of the company.<br />Going Concern<br />The assumption here is made that a business will keep on trading or operating for a very long time.<br />Going concern concept indicates that the financial statements don't necessarily represent that business's worth, if the assets were liquidated. However, those assets can be used for any future financial operations.<br />Consistency<br />For all businesses, the principles used should be same for each and every set of accounts which are prepared. <br />This means, if depreciation is recorded, it should always be set at the same percentage every time.<br />Prudence<br />Businesses should try to make mistakes on the side of caution, while making estimates and valuations. <br />Cost<br />This principle states that the company has to consider the original cost of fixed assets like building and machinery, rather than market value. <br />Stable Money<br />Any transactions occurring over a certain time frame should always reflect single currency and exchange rate. This way, a year's accounts can be compared with another, despite the rate of inflation.<br />Duality<br />Every transaction has 2 effects. Let's say the business purchases a new asset, printing machine. This will show an increase in fixed assets and also an increase in liabilities or cash.<br />