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Reference: Pearson Edexcel International AS / A Level Accounting Student Book 1. Accounting starts with the assumptions that make records fair, consistent and useful.
Main skills from this lesson
The business is recorded as separate from the owner. If an owner pays a personal bill, it is not a business expense; if the owner takes cash from the business, it is drawings.
Owner | Business
Ask: whose transaction is this?
Income is recorded when it is earned and expenses when they are incurred, not only when cash moves. This helps match profit to the correct period.
Earned!= cash received
Match income and expenses to the same period.
Accounts normally assume the business will continue operating. This affects how assets are valued and why long-term resources are not treated as immediate expenses.
Continue -> next period
If the business will continue, spread long-term benefits sensibly.
Continue with quizzes, flashcards, or games when you are ready.