- Accrual Basis
Financial statements must be prepared using the accrual accounting method, meaning that transactions and events are recognized when they occur, not when cash is received or paid.
This ensures that revenues and expenses are matched to the correct accounting period, providing a more accurate picture of a company’s financial position. - Going Concern
Financial statements are prepared under the assumption that the company will continue to operate in the foreseeable future.
If a company is expected to close or face severe financial difficulties, financial statements must disclose this fact, and assets may need to be valued differently. - Consistency and Comparability
Companies must apply accounting policies consistently from one period to another to ensure comparability of financial statements over time.
If a company changes its accounting policies, it must disclose the change and its impact to maintain transparency. - Fair Presentation and Transparency
Financial statements should provide a true and fair view of a company’s financial position and performance.
This means using proper disclosures, avoiding misleading information, and complying with IFRS standards to enhance transparency for investors and stakeholders.
