XACC 280\Week 1 - Accounting Assumptions, Principles, and Constraints
There are three basic assumptions of accounting. These assumptions help to depict economic events, to enter events in historical order of financial activity, and to communicate the information through accounting reports. When analyzing economic events, companies will focus on events that are appropriate to the company. Recording of financial information is done in a very systematic way; they are recorded in chronological diary that is usually measured in dollars and cents. Then the information is transmitted to the user by using graphs, charts, percentages, or other forms of writing as well.