Audit Techniques

Topics: Generally Accepted Accounting Principles, Balance sheet, Income statement Pages: 2 (529 words) Published: February 20, 2013

Automated accounting is an approach to maintaining up-to-date accounting records with the use of accounting software.
This software is often configured to allow for easy cross posting of receivable and payable, eliminating the need to enter multiple posting in order to keep accounting record in compliance with generally accepted accounting principles.

Accounting as it exists today may be viewed as a system of assumptions, doctrines, tenets, and conventions, all encompassed by the phrase “generally accepted accounting principles.” Many of these principles developed gradually, as did much of common law. In recent decades, however, an authoritative body, such as the Financial Accounting Standards Board, has determined standards or rules for accounting principles. Following are several fundamental accounting concepts. The entity concept states that the item or activity (entity) that is to receive an accounting must be clearly defined, and that the relationship assumed to exist between the entity and external parties must be clearly delineated. The going-concern assumption states that it is expected that the entity will continue to operate indefinitely. The historical-cost principle states that economic resources be recorded in terms of the amounts of money exchanged; when a transaction occurs, the exchange price is by its nature a measure of the value of the economic resources that are exchanged. The realization concept states that accounting takes place only for those economic events to which the entity is a party. This principle therefore rules out recognizing a gain based on the appreciated market value of a still-owned asset. The matching principle states that income is calculated by matching a period's revenues, such as the amount of merchandise sold, with the expenses (monetary costs) incurred in order to bring about that revenue. The accrual principle defines revenues and expenses as the inflow and outflow of all assets—as...
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