Accounting principles on the companies acts

Accounts are prepared under four fundamental
accounting principles. These constitute the underlying framework for all the
items to be included in the accounts and all the specific disclosures required
either by the act or the various accounting standards.

The fundamental accounting principles are listed
here.
Going concern
The company is be presumed to be carrying on
business as a going concern. What this means, in practice, is that the company
will have the ability to continue to trade in substantially the same way as it
does in the financial period reported on for the foreseeable future. This
particular principle is very important to the auditors and we will look at it
is in more detail in chapter 24.
Consistency
Accounting policies will be applied consistently
within the same accounts and from one financial year to the next.
Prudence
The amount of any item reported on the financial
statements will be determined on a prudent basis, and in particular:
a)   
Only
profits realized at the balance sheet date shall be included in the profit and
loss account; and
b)   
All
liabilities and losses which have arisen or are likely to arise in respect  of the financial year to which the accounts
relate or a previous financial year shall be taken into account, including
those which only become apparent between the balance sheet date and the date on
which it is signed on behalf of the board of directors.
Accruals basis
All income and charges relating to the financial
year to which the accounts relate will be taken into account, irrespective of
the actual date of receipt or payment.
Departure from the accounting principles
If it 
appears to the directors of a company that there are special reasons for
departing from any of the principles stated above in preparing the company’s
accounts in respect of any financial year they may do so, but particulars of
the departures, the reasons for it and its effect must be given in a note to
the accounts.

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