Briefly discuss about the Basic accounting principles

There are five basic accounting principles. These are outlined below:

1. Principle of double entry—each transaction is entered twice in the books of accounts. For every debit there must be a corresponding credit.

2. Principle of recording—all accounting entries emanate from a source document. This is the authority for entry into journals (and to the general and subsidiary ledgers).

3. Principle of profit determination—the life of a business is divided into time periods. Revenue and expenses from those periods can be matched to determine whether a profit or loss has been obtained.

4. Principle of reporting—accounting information is to be conveyed to a person without accounting knowledge in a clear, logical and understandable form. Examples are the Revenue Statement and the Balance Sheet.

5. Principle of control—accountants and bookkeepers must be constantly alert to ensure that the accounting practices minimize the chances of error and fraud.