ACC 102: Accounting Concepts and Principles – Study Notes
Course: ACC 102 – Accounting Concepts and Principles
Topic: Chapter 2 – Accounting Concepts and Principles
Prepared for: ABM Students
Tags: Accounting Basics, Financial Information, Philippine Standards
I. Fundamental Accounting Concepts
● 1. Separate Entity Concept – The business is treated as separate from its owners. Only
business transactions are recorded in the books, not personal ones.
● 2. Periodicity/Time Period Concept – The business life is divided into regular reporting
periods for financial reporting.
● 3. Stable Monetary Unit – All transactions are stated in peso; inflation changes are
ignored.
● 4. Going Concern Assumption – The business is expected to continue indefinitely unless
proven otherwise.
II. Basic Accounting Principles
● 1. Objectivity – Records must be based on verifiable evidence.
● 2. Historical Cost – Assets are recorded at their acquisition cost.
● 3. Accrual Basis – Revenue recorded when earned, expenses when incurred.
● 4. Full Disclosure – All relevant information should be provided clearly.
● 5. Materiality – An item is material if it influences decisions.
● 6. Consistency – Same accounting methods used each period.
● 7. Matching – Expenses are matched with related revenues.
● 8. Cost-Benefit – Benefits of information should exceed costs.
● 9. Prudence – Exercise caution; do not overstate assets or income.
Course: ACC 102 – Accounting Concepts and Principles
Topic: Chapter 2 – Accounting Concepts and Principles
Prepared for: ABM Students
Tags: Accounting Basics, Financial Information, Philippine Standards
I. Fundamental Accounting Concepts
● 1. Separate Entity Concept – The business is treated as separate from its owners. Only
business transactions are recorded in the books, not personal ones.
● 2. Periodicity/Time Period Concept – The business life is divided into regular reporting
periods for financial reporting.
● 3. Stable Monetary Unit – All transactions are stated in peso; inflation changes are
ignored.
● 4. Going Concern Assumption – The business is expected to continue indefinitely unless
proven otherwise.
II. Basic Accounting Principles
● 1. Objectivity – Records must be based on verifiable evidence.
● 2. Historical Cost – Assets are recorded at their acquisition cost.
● 3. Accrual Basis – Revenue recorded when earned, expenses when incurred.
● 4. Full Disclosure – All relevant information should be provided clearly.
● 5. Materiality – An item is material if it influences decisions.
● 6. Consistency – Same accounting methods used each period.
● 7. Matching – Expenses are matched with related revenues.
● 8. Cost-Benefit – Benefits of information should exceed costs.
● 9. Prudence – Exercise caution; do not overstate assets or income.
