Meaning of Accounting Principles
According to American Institute of Certified Public Accountants
“Principles of accounting are the general law or rule adopted or proposed as a guide to action, a settle ground or basis of conduct or practice“
Accounting principle are the rules and way to prepare the accounts adopted by the accountant universally.
Essential Features of Accounting Principles
- Usefulness: The Usefulness of accounting means it must useable to the users in their decision-making process. The information must be relevant to every user for their analysis process.
- Man-Made: Accounting principle made my man it is not made by nature. It made for universal acceptance so every organization will use the same method for their accounting.
- Flexible: Accounting principle is not hard to follow it is Flexible to follow. If the accountant feels the problem with the accounting principle so he can make an account in their own way. Accounting principles can be changed with time.
- Accepted by Everyone: Accounting principle is accepted by everyone from every organization. It uses the rule of accounting which is generally Accepted.
- Objectivity: A principle will be accepted based on facts and figures and there no personal bias. If there is personal bias than the users of information not believe in the financial statement of that company.
- Feasibility: Accounting principles must be easy to follow otherwise accountant will not the principles there is no compatibility.