Accounting Principle (Noun)
Meaning
A principle that governs current accounting practice and that is used as a reference to determine the appropriate treatment of complex transactions.
Classification
Nouns denoting cognitive processes and contents.
Examples
- The company's financial statements were prepared in accordance with the accounting principle of materiality, which requires that all significant transactions be disclosed.
- The accountant applied the accounting principle of conservatism when valuing the company's inventory, recognizing that it was better to err on the side of caution.
- The new accounting principle of revenue recognition was implemented to provide a more accurate picture of the company's financial performance.
- The auditor reviewed the company's financial statements to ensure that they were in compliance with the accounting principle of going concern.
- The accounting principle of matching requires that expenses be matched with the revenues they help to generate, which is why the company depreciated its assets over their useful life.