The framework for the preparation and presentation of financial statements mentions underlying assumptions used in the IFRS/PFRS, to wit:
- Accrual Basis Assumption
Financial statements are prepared on the accrual basis of accounting. Under this basis, the effects of transactions and other events are recognized when they occur (and not as cash or its equivalent is received or paid) and they are recorded in the accounting records and reported in the financial statements of the periods which they relate.
Under the going concern assumption, organizations are presumed to operate continuously or indefinitely. Though, realistically speaking, some businesses fail, however, companies are set-up by owners with the hope of long life, and many somewhat achieve that goal...read more
Impliedly, basic inherent assumptions (implicit assumptions) are the following:
The economic entity or accounting entity assumption presumes that economic events and transactions can be identified with an economic entity...read more
In accounting, periodicity refers to the equal length of time or relatively short periods of the economic life of the organization...read more
Monetary unit assumption states that elements of financial statements must be measured in terms of Philippine Peso currency...read more
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