Description- Underlying Assumptions

1. ACCRUAL:
Accrual implies:
(a)Revenues should be recognized when earned whether received or not.
(b)Cost and expenses should be recognized when incurred whether paid or not.

2. GOING CONCERN:
The concept implies that the enterprise will continue in a foreseeable future (at
least twelve months after the balance sheet date).

3. MATCHING OF COSTS AND REVENUES:
Expenses should be matched with revenues whenever it is reasonable and
practicable to do so.

4. ECONOMIC ENTITY ASSUMPTION:
The assumptions implies that economic events should be identified with particular
unit of accountability.

5. MONETARY MEASURMENTS:
Only those transactions and events are recorded which can be measured in monetary
terms, e.g. sale, purchases, expenses, fixed assets.

6. DUALITY:
Every transaction has a double effect a basic principle of double entry
accounting.